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.
- The purchase of a dwelling together with a granny annexe permits a claim to multiple dwellings relief, which results in an SDLT saving.
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.
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