From 8th July 2020 the majority of purchasers in England and Northern Ireland will either pay no – or at the very worst, a reduced amount of Stamp Duty Land Tax (‘SDLT’) when completing their property purchase.
The temporary holiday was announced by Chancellor Rishi Sunak as part of his Summer Economic Statement and is intended to run until 31st March 2021. As a result of the measures introduced, anyone purchasing a main residence costing up to £500,000.00 will not have to pay any SDLT and more expensive properties will only be taxed on their value above that amount.
If the property purchased is your main home you won't pay any SDLT on it at all if it costs £500,000.00 or less. The next portion of the property's price (£500,001.00 to £925,000.00) will be taxed at 5%, and the £575,000.00 after that (£925,001.00 to £1.5 million) will be taxed at 10%. The remaining amount (over £1.5 million) will be taxed at 12%.
Before the announcement, SDLT in England and Northern Ireland was paid on land or property sold for £125,000.00 or more, while first-time buyers did not pay any SDLT up to £300,000.00.
Investors and second home buyers will also be eligible for a tax saving but will still have to pay the 3% SDLT surcharge introduced following a change in the regulations in April 2016.
The holiday applies with immediate effect although, unfortunately, if you completed your purchase before 8th July 2020 you will not be able to apply for a refund. However, SDLT is payable on completion and therefore if you have already exchanged contracts with completion to take place on or after 8th July (and on or before 31st March 2021) then you will benefit from the recent changes .
The position in Scotland and Wales is different to that in England and Northern Ireland and at the time of producing this article there were no changes to their existing rules.
The SDLT rules are complicated and complex and require careful consideration. If you are considering buying a property and wish to discuss the implications of the recent changes and how they might affect you then please do not hesitate to contact a member of John Hodge Solicitors’ Property Team, who will be pleased to assist.