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Stamp Duty Land Tax: Summer Economic Update

As widely anticipated, in a move to boost confidence in the property market and increase momentum in property transactions, Rishi Sunak has today announced temporarily reduced rates of Stamp Duty Land Tax (SDLT) on residential property purchases.

The key measures are:

  • Increase the 0% threshold to £500,000. This means that you will not pay SDLT on the first £500,000 of the purchase price of a new residential property where the standard rates apply
  • Effective immediately and the temporary reduction is in place until 31 March 2021
  • It is estimated that nine out of 10 people getting on or moving up the property ladder will pay no SDLT at all
  • During this period the special first-time buyers’ relief rules are effectively redundant as the 0% threshold is available to all individuals purchasing residential property
  • The new 0% band will also apply to residential leasehold sales and new residential leases
  • Where a purchaser meets the conditions for higher (or surcharged) rate for additional dwellings, the first 3% band is increased to £500,000. This will also apply to company purchasers
  • The residential rates of SDLT are as follows from 8 July 2020 to 31 March 2021:
Property value or lease premium Standard residential rates Higher rates for additional properties (or company purchasers)
Up to £500,000 0% 3%
The next £425,000 (from £500,001 to £925,000) 5% 8%
The next £575,000 (from £925,001 to £1.5m) 10% 13%
Remaining consideration (over £1.5m) 12% 15%
  • If a residential property was purchased for £750,000 on 7 July 2020, the SDLT payable would be £27,500 under the previous rates. From 8 July 2020, the SDLT bill falls by more than half to £12,500
  • The new rates will need to be considered for any linked transactions where there are multiple sales or purchases between the same (or connected) buyer and seller. A linked transaction occurring during a period of temporary reduction in rates may lead to lower SDLT than originally anticipated
  • This measure is temporary and will last until 31 March 2021, when the previous SDLT rates will apply
  • This rate change only affects property purchased in England and Northern Ireland
  • The Welsh and Scottish governments have subsequently announced their own changes to land transaction tax (LTT) and land & buildings transactions tax (LBTT) which apply to residential property purchases in Wales or Scotland. Read further information in my blog here
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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