What do the temporary Stamp Duty Land Tax rates in England mean?

We welcomed the UK Chancellor's news that Stamp Duty Tax will not have to be paid up to £500,000 on the purchase of a house in England.

Anyone buying a residential property between 8 July 2020 and 31 March 2021 will be exempt from the tax up to that threshold.

This is regardless if the buyer is a first-time buyer (who didn't have to pay Stamp Duty up to £300,000 previously), or someone who has owned a property before.

On purchases over the £500,000 threshold, buyers will pay a 5% SDLT on the portion from £500,001 to £925,000, 10% on the portion from £925,001 to £1.5 million and 12% on any portion over £1.5 million.

Visit gov.uk for more information

Higher rates for second home purchases

Iain McKenzie, CEO of The Guild of Property Professionals, explains other elements of the announcement, such as when it comes to purchasing a second home, the Government has introduced higher additional rates with a 3% higher rate on top of the new revised standards.

“So, what this means is that people purchasing a holiday home up to the threshold value of £500,000 will pay 3% SDLT.  Those buying a second home over the threshold will pay 8% on the portion from £500,001 to £925,000, 13% on the portion from £925,001 to £1.5 million, and 15% on the remaining portion over £1.5 million,” he said.

Visit gov.uk for more information

New leasehold sales and transfers

He notes that on new leasehold sales and transfers, the nil rate band which applies to the net present value of any rents payable for residential property is also increased to £500,000 until the end of March next year. A SDLT of 1% will be charged on any net present value of any rent over the threshold. 

McKenzie says that it is not just individuals that will benefit from the changes. “Companies purchasing residential property under the £500,000 threshold will also be exempt from the paying SDLT. In additional companies that buy residential property of any value that meet the relief criteria from the corporate 15% SDLT will also benefit from the change made.”

From 1 April 2021, the SDLT holiday will come to an end and the SDLT regulations will revert to what they were before these temporary changes were announced. “We will likely see a rush of activity before 31 March 2021, with those who have access to finance making the most of the opportunity the SDLT holiday provides,” McKenzie concludes.

For more details, call one of our team here at Morris, Marshall and Poole with Norman Lloyd at one of our local high street offices in Powys, Ceredigion, Gwynedd and Shropshire, or visit www.morrismarshall.co.uk.