The Government’s Economic Statement on 8 July announced a temporary reduction to the rates of Stamp Duty Land Tax (SDLT) on purchases of residential property between 8 July 2020 and 31 March 2021.
Prior to the announcement, an individual would pay no SDLT on the first £125,000 of purchase consideration, provided they did not own any other residential property. This threshold has been temporarily increased so that SDLT is only payable on the consideration in excess of £500,000.
The 3% higher rate of SDLT for purchases of additional dwellings, or purchases by companies, will still apply on top of the revised standard rates for the period from 8 July 2020 to 31 March 2021. The rates are as follows:
|Property or lease premium or transfer value||SDLT rate||SDLT rate where 3% surcharge applies|
|Up to £500,000||0%||3%|
|£500,001 – £925,000||5%||8%|
|£925,001 – £1.5 million||10%||13%|
|Excess above £1.5 million||15%||15%|
As usual, the bands apply to the amount of consideration falling into each band.
For companies purchasing residential property worth more than £500,000 the corporate 15% SDLT charge will apply to the whole of the consideration, unless any of the relevant relief conditions are met.
The change also means that the special rules for first time buyers are replaced by the reduced rates set out above from 8 July 2020 to 31 March 2021.
It is thought that the temporary reduction to the SDLT rates will mean that nearly nine out of ten people getting on or moving up the property ladder will pay no SDLT at all. The change might also make it more attractive for those considering transferring residential property into a limited company, although advice should be taken on the other tax implications of such a transfer.