Written by Jane Mickleburgh, Associate at Spire Solicitors LLP.
On 8th July 2020, Chancellor Rishi Sunak, announced a Stamp Duty Land Tax (SDLT) holiday to help Britain’s housing market following the coronavirus pandemic. The property tax threshold has been raised to £500,000 in a bid to make home buyers exempt from paying any SDLT. The new threshold will be in place until the 31st March to help stimulate demand for the property market and to help kickstart Britain’s economy.
What is SDLT?
SDLT is a form of tax that applies when buying both freehold and leasehold properties. There are several different rate bands, and how much you pay depends on the price of the property you are purchasing and whether you are a first-time buyer.
How will the SDLT holiday work?
By raising the threshold, SDLT will only be charged on properties costing £500,000 or more. This will help buyers who have taken a financial hit during this coronavirus crisis.
The increase will come into effect immediately and will last until 31st March 2021.
What are the new purchase price bands?
From the 8th July 2020 until the 31st March 2021 the purchase price bands will be:
- Up to £500,000 the SDLT rate is 0%
- £500,001 to £925,000 the SDLT rate is 5%
- £925,001 to £1.5 million the SDLT rate is 10%
- Over £1,500,000 the SDLT rate is 12%
The previous rules for first-time buyers are now replaced by the new reduced rates.
What about second homes and buy-to let properties?
Buyers of second homes and buy-to-let properties will have to pay 3% on top of the revised standard rates.
- Up to £500,000 the SDLT rate is 3%
- £500,001 to £925,000 the SDLT rate is 8%
- £925,001 to £1.5 million the SDLT rate is 13%
- Over £1,500,000 the SDLT rate is 15%
What does this mean for the housing market?
The government has announced the changes to boost the property market, after house prices started to fall following lockdown. It is hoped if buyers save money on SDLT, property prices can stay at the same level as they will be more affordable.
This is a general guide to the changes being implemented. If you would like any more information, need a quote for buying or selling a property, or require any specialist tax advice please contact our team on 01603 677077.
If you would like to receive our free guide to purchasing a property please email marketing@spiresolicitors.co.uk
