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Stamp duty temporary holiday and changes

Stamp duty land tax payable on properties purchased for up to £500,000 in England and Northern Ireland has been temporarily suspended, and the first £500,000 of higher value properties is effectively purchase tax free. Changes also made to the rates payable in Wales.

This stamp duty holiday will be in place until March 2021, with immediate effect. As stamp duty is payable on completion, those buyers who have exchanged contracts but have not yet completed on their transactions will benefit from the change provided completion is within the time period.

The announcement brought welcome relief to a housing market recovering from two months trading absence amongst estate agents and developers during the national lock down. This stimulus is hoped to encourage anyone considering the timing of their next home or investment purchase to seize the opportunity and benefit from the substantial tax saving during this limited relief window.

In brief, those buyers completing a purchase of their main residence at a price up to £500,000 between 8 July 2020 and 31 March 2021 will not pay any stamp duty therefore resulting in a maximum saving of £15,000. For properties priced above £500,000, stamp duty will be levied above the £500,000 threshold on the existing rates as set out below, this does mean that all buyers will benefit from the saving even if they are purchasing a property value over £500,000. The chancellor suggested that on average stamp duty bills will fall by £4,500, and nearly nine out of 10 people buying a main home this year will pay no stamp duty.

Standard SDLT rates for home movers in England

Purchase price

Stamp duty charged on the proportion of price in band 

Up to £500,000

0%

£500,000 - £925,000

5%

£925,001 - £1.5 million

10%

Above £1.5 million

12%

A Stamp Duty Land Tax (SDLT) or Land Transaction Tax Return must still be filed with HM Revenue and Customs following completion of a property purchase where the price agreed exceeds £40,000.

Landlords and second home buyers are also eligible for savings

Whilst the stamp duty holiday also brings savings to landlords and those buying second homes, the extra 3% surcharge of stamp duty will remain payable.

Higher rates for additional dwellings (e.g. second homes or a buy to let) in England

Purchase price

Stamp duty charged on the proportion of price in band 

Up to £500,000

3%

£501,001 - £1.5 million

8%

£925,001 - £1.5 million

13%

Above

15%

 

The position in Wales

A stamp duty holiday has also been announced by the Welsh government and which takes effect as of 27th July 2020 until 31st March 2021. For standard rate transactions that complete after that date no Land Transaction Tax (LTT) will be payable on the first £250,000 of the purchase price. Unfortunately, this stamp duty holiday will not benefit Landlords or those buying second properties where the existing rates will continue to apply.

 

Standard LTT rates for home movers in Wales

Purchase price

LTT charged on the proportion of price in band 

Up to £250,000

0%

£250,001 - £400,000

5%

£400,001 - £750,000

7.5%

£750,001 - £1.5 million

10%

Above 

12%


Higher rates for additional dwellings (e.g. second homes or a buy to let) in Wales

Purchase price

LTT charged on the proportion of price in band 

Up to £180,000

3%

£180,001 - £250,000

6.5%

£250,001 - £400,000

8%

£400,001 - £750,000

10.5%

£750,001 - £1.5 million

13%

Above

15%

 

Disclaimer

This information is for educational purposes only and does not constitute legal advice. It is recommended that specific professional advice is sought before acting on any of the information given.

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