Skip to main content

COVID-19: UK Chancellor announces Stamp Duty Land Tax Holiday


United Kingdom

The UK government continues to throw its weight behind the housing market's return to health, with the Chancellor of the Exchequer granting a temporary SDLT holiday on the first £500,000 of all residential property purchases in England and Northern Ireland, with immediate effect, potentially saving buyers up to £15,000 on a property purchase.

  Changes to SDLT between 8 July and 31 March 2021
The purchase of a dwelling costing up to £500,000 will not incur Stamp Duty Land Tax (SDLT), unless it is an additional dwelling.
Purchases exceeding the new threshold will only be taxed on the slice of consideration exceeding £500,000. The relief could therefore save individual buyers up to £15,000 in SDLT on property purchases exceeding the new threshold.
Further, anyone purchasing an additional dwelling will only be taxed at the rate of 3% on the first £500,000, with tapered charges for consideration above that level.
The SDLT holiday aims to encourage buyers who have taken a financial hit due to Covid-19 to proceed with property purchases, and boost the housing market.
What to expect from the SDLT holiday
"Only dwelling" rates
  • If the dwelling costs less than £500,000, no SDLT will be payable;
  • Any amount above the new threshold up to £925,000 will be taxed at 5%;
  • After that, anything up to £1.5 million will be taxed at 10%; and
  • Any remaining amount above £1.5 million will be taxed at 12%.
Additional dwelling rates
  • Dwellings with a value up to £500,000 – 3%;
  • Any amount above the new threshold up to £925,000 – 8%;
  • After that, anything up to £1.5 million – 13%; and
  • Any remaining amount above £1.5 million – 15%.
The relief could give rise to some unexpected results, for example where multiple properties are acquired and where mixed use properties are acquired:
  • Until now, non-residential or mixed rates of SDLT typically gave rise to a lower SDLT liability than residential rates and so identifying non-residential elements in the purchase of a dwelling resulted in savings. 
During the SDLT holiday, however, the residential rates of SDLT will sometimes give rise to a lower SDLT liability than the non-residential/mixed rates depending upon the actual purchase price.
  • The purchase of a dwelling together with a granny annexe permits a claim to multiple dwellings relief, which results in an SDLT saving. 
However, due to the existence of the 1% minimum rate where the relief is claimed, it will actually be more favourable not to claim the relief for certain lower-value purchases.
For information on the UK government's measures to relax legislation concerning the higher rate of SDLT purchasers are required to pay on acquiring a second dwelling, please see our previous article: Government relaxes SDLT rules on 'next home' buyers.
To discuss these and other recent developments and guidance on the housing market, please contact one of our residential development specialists: Sue Simpson, Dinah Patel, Helen Andrews and Sinead Thomasson; or to discuss your specialist tax requirements speak to our property tax expert, Nick Beecham.

Sign up to our email digest

Click to subscribe or manage your email preferences.


Areas of Expertise

Real Estate

Related Work Areas

Real Estate