Stamp Duty Land Tax – Rishi’s reduced rates

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It will be welcome news for home owners and prospective buyers that Chancellor of the Exchequer has announced the Government is to stimulate the housing market.

Rishi Sunak has introduced a temporary reduction in Stamp Duty Land Tax (SDLT) for all residential properties purchased between July 8th, 2020 until March 31st, 2021 inclusive.

If you purchase a residential property between those dates, you only start to pay SDLT on the amount that you pay for the home above £500,000. These rates apply whether you are buying your first home or have owned property before.

The below table shows the SDLT due on all freehold purchases and most leasehold purchases*:

Property or lease premium or transfer value SDLT rate
Up to £500,000 Zero
The next £425,000 (the portion from £500,001 to £925,000) 5%
The next £575,000 (the portion from £925,001 to £1.5 million) 10%
The remaining amount (the portion above £1.5 million) 12%

 *The grant of a new lease at the time of purchase (e.g. new leasehold apartments) involves a more complex calculation for tax, which takes account of both the purchase price and the level of ground rent payable throughout the lease term. Specialist guidance is therefore recommended.

What about higher rates tax payers i.e. those purchasing additional properties?

Everyone was relieved to hear that higher rates tax payers will benefit too.

The usual 3% higher rate for purchases of additional dwellings applies on top of revised standard rates above for the period July 8th, 2020 to March 31st, 2021. Thus, the following rates apply for higher rates payers:

Property or lease premium or transfer value SDLT rate
Up to £500,000 3%
The next £425,000 (the portion from £500,001 to £925,000) 8%
The next £575,000 (the portion from £925,001 to £1.5 million) 13%
The remaining amount (the portion above £1.5 million) 15%

Companies buying residential property worth less than £500,000 will also benefit from these changes, as will businesses that buy residential property of any value where they meet the relief conditions from the corporate 15% SDLT charge.

Tailored tax advice

SDLT can still be extremely complicated, and many factors influence the rate that is applied and any reliefs that can be claimed. Here at Punch Robson we have specialists in the field who can tailor advice and answer any questions you may have on the topic.

If you would like to talk this through, or obtain a quotation for conveyancing, then contact us on 01642 754050 or request a call back.

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