Breaking News: SDLT Cut Confirmed

Chancellor Rishi Sunak announced on Wednesday 8 July 2020 that there will be a temporary cut in place for stamp duty. From now until 31 March 2021 there will only be a charge on properties costing £500,000 or more.

The cut takes effect immediately and the threshold is raised to £500,000 for all buyers. He states the aim behind this decision is to boost jobs in this sector and increase the confidence of sellers and buyers to move, improve, renovate which will drive growth.

Previously stamp duty was charged on properties costing £125,000 or more, except for first-time buyers, whereby they paid nothing up to £300,000 and then a reduced rate up to £500,000.

With this announcement there will be a tax cut for first-time buyers looking to purchase a property over £300,000 and other buyers purchasing a property over £125,000 (please note there are different rules for people purchasing second homes).

Before the announcement the property portal Rightmove analysed the potential stamp duty savings for the areas around England. It factored in that the savings would not be just for first time buyers, and it estimated a save of minimum £12,000 under the new form.

Mile Shipside, Property Expert at Rightmove, said:

“This move will help to keep the nation and wider economy moving because keeping the current momentum going will help prevent destabilising falls in property prices as unemployment grows, and enable a quicker economic recovery. Lockdown prevented 175,000 would be sellers from coming to market so we hope this Stamp Duty holiday will provide the spur for those missing movers to come to market. They will find there’s currently record demand for their properties from prospective buyers, with Rightmove enquiries to agents now double what they were before lockdown. Home-movers will be grateful that the changes come into effect straight away so they don’t have to delay their plans, and what we could see now is people rushing to get a price agreed before some sellers put their prices up in the hope people will be able to pay more because of the tax savings.”

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%

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%

New leasehold sales and transfers

The nil rate band which applies to the ‘net present value’ of any rents payable for residential property is also increased to £500,000 from 8 July 2020 until 31 March 2021.

The following rates will apply:

Net Present Value of any Rent SDLT rate
Up to £500,000 Zero
Over £500,000 1%
By Published On: July 9th, 2020Categories: Insights

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