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Sweeping Changes Around Stamp Duty Which is Excellent News for Current Buyers and Potential Buyers

The Chancellor Rishi Sunak has announced sweeping changes this afternoon around Stamp Duty which is excellent news for current buyers and potential buyers.

Stamp Duty is a tax applied when you buy a property and the announcement that there will be a payment holiday starting immediately means homebuyers buying their main home will save thousands of pounds.

What's Changing?

The Government has raised the stamp duty threshold to £500,000 for buyers until 31st March, 2021

Based upon what information has been given this would suggest anyone buying their main home for less than £500,000 will not need to pay any stamp duty.

We anticipate it will not remove the higher rate for investors or clients buying a second home

We are awaiting HMRC to issue us with the formal technical guidance before we can update our online quotation system or provide any further specific guidance.

Whilst favourable to many obviously it may affect those properties on the market for above £500,000.00 and reduce appetite for those properties just above the £500,000.00 threshold.


Stamp Duty Land Tax: temporary reduced rates 

Reduced rates of Stamp Duty Land Tax (SDLT) will apply for residential properties purchased from 8 July 2020 until 31 March 2021 inclusive.

Residential Rates on purchases from 8 July 2020 to 31 March 2021

If you purchase a residential property between 8 July 2020 to 31 March 2021, you only start to pay SDLT on the amount that you pay for the property above £500,000. These rates apply whether you are buying your first home or have owned property before.

You can use the table to work out the SDLT due:

 
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%

From 8 July 2020 to 31 March 2021 the special rules for first time buyers are replaced by the reduced rates set out above.

 

Higher rates for additional properties

The 3% higher rate for purchases of additional dwellings applies on top of revised standard rates above for the period 8 July 2020 to 31 March 2021.

The following rates apply:

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

On the 1 April 2021 the reduced rates shown in the above tables will revert to the rates of SDLT that were in place prior to 8 July 2020.

Use the HMRC SDLT calculator to work out how much tax you’ll pay.


For further information, please follow the link below: 

https://www.bbc.co.uk/news/business-53319433

Andrew Yates

LLP Member and Head of Department

Andrew joined Elliot Mather LLP in 2000 as a Legal Executive and subsequently qualified as a Solicitor.  He has been an LLP Member since 2008 and is now head of the Residential Property Department.  

His vision, experience, knowledge and IT skills have been key to the development of the Residential Property Departments across the practice over the last 15 years.   Andrew has a wealth of experience of all types of property transactions and specialises in:-

  • Residential sales and services and purchases.
  • Rights to buy
  • Transfer of equity
  • Re-mortgage/bank security
  • Equity release
  • Deed of Easements
  • New Builds
  • Complex Legal Charges
  • Declaration of Trust
  • Property Developments
  • Complex Property Transactions.

Andrew has a friendly, no nonsense approach to work which is appreciated by clients, Estate Agents, Developers and his staff alike.

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