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Stamp Duty Land Tax – Budget 2021

Residential property – nil rate band extension

As widely anticipated, the stamp duty land tax (SDLT) ‘holiday’ for residential property purchases in England and Northern Ireland has been extended for a further three months until 30 June 2021. This is great news for those who have had property transactions held up due to covid restrictions and were going to struggle to complete by 31 March 2021.

We now have a nil rate band on the first £500,000 for residential properties completing by 30 June 2021. This will be followed by a nil rate band of £250,000 for three months until 30 September 2021, before finally reverting to the former £125,000 level from 1 October 2021.

So how does this impact on someone buying a house for £500,000?  Provided you complete by 30 June 2021 then no SDLT will be payable as long as the transaction does not concern the acquisition of an additional dwelling and the purchasers are UK resident.  This would rise to £12,500 for the following three months (if not a first-time buyer) before rising back up to £15,000 from October 2021. Residential conveyancers may therefore expect the busy period to continue for several months yet!

Non-resident surcharge – from 1 April 2021

Although not specifically a Budget announcement, it should not be forgotten that there is a new 2% non-resident surcharge being introduced from April 2021 in England and Northern Ireland. The new rates will apply to purchases of both freehold and leasehold property as well as increasing the SDLT payable on rents on the grant of a new lease.

A new SDLT-specific non-residence test needs to be considered for the purposes of determining whether the surcharge applies rather than using the normal statutory residence test. The new rules are complex and also apply where one purchaser of a property is non-resident.

SDLT relief for freeports

SDLT relief has been introduced for purchases of land and buildings within a freeport tax site, subject to a control period of up to 3 years and the land being acquired and used in a ‘qualifying manner’.

Relief from SDLT will apply to qualifying transactions with an effective date from the date the freeport tax sites are designated until 30 September 2026.

This will be great news to incentivise investment in land and buildings in freeport tax sites which include Plymouth and Solent.

FEATURING: Heather Britton
Heather specialises in providing tax advice to companies and their directors/shareholders, as well as unincorporated businesses and property owners. She enjoys providing practical tax solutions,… read more
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