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SDLT Holiday

As has been widely publicised, the Chancellor announced a temporary reduction in the rates of residential SDLT** as part of the government’s “mini-Budget”. The nil rate band for all residential property will be increased to £500,000 (from £125,000) effective immediately and until 31 March 2021, in the hopes of both supporting the housing market as it recovers from its hibernation during the Covid-19 lockdown and trying to put money back into consumers’ pockets to help kick-start spending in the wider economy too.

This SDLT holiday means that the majority of house purchases will be taken outside of SDLT altogether, but equally brings a saving of up to £15,000 for purchases of more expensive properties too.

The reductions apply to new leases over residential properties as well as freehold transactions, and first time buyers (who had distinct SDLT rates for purchases up to £500,000) could also be better off under these temporary measures.

There was reason to cheer for residential investors too, as even though the rules for buying a second home or investment property remain the same, meaning that the 3% supplement will still apply on top of the revised residential rates, again there will be a saving available for these purchasers when compared with the previous rates. In particular, and until 31 March 2021, the SDLT rate for these purchasers will be a flat 3% until the consideration exceeds £500,000 (whereas previously the rates of SDLT would have started to increase at £125,000).

The new rules are effective from 8 July, but will not apply where substantial performance (which is the trigger for paying SDLT) has already occurred prior to that date. It is expected that the rates for residential SDLT will revert to their previous rates from 1 April 2021.

**Note that these changes relate only to properties in England and Northern Ireland as stamp duty on land in Scotland and Wales has been devolved to their national governments.


Posted on 26/10/2020 in Property Tax News, Stamp Duty

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