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Stamp Duty Land Tax (SDLT) is a significant amount of tax that must be paid if you buy property or land over a certain price in England.
In July 2020, the Government announced a temporary stamp duty ‘holiday’. This is designed to make buying homes more affordable during the coronavirus crisis.
We have put together some information to help you understand more about the stamp duty holiday and how you can get the most out of it.
If you buy a residential property between 8 July 2020 and 31 March 2021, you only start to pay standard rate stamp duty 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.
The holiday will temporarily increase the standard rate stamp duty threshold from £125,000 to £500,000. This means that if your property costs £500,000 or less, most buyers will not have to pay any stamp duty at all.
The standard rate of stamp duty that you will pay goes up depending on the value of the property.
| Property value | Holiday SDLT rate |
|---|---|
| Up to £500,000 | 0% |
| £500,001 to £925,000 | 5% |
| £925,001 to £1.5 million | 10% |
| Any remaining amount over £1.5 million | 12% |
The change means potential buyers will be able to make savings of up to £15,000 when purchasing a property.
If you are buying an additional property you may still have to pay the additional rate of stamp duty on top of the revised standard rates mentioned above.
We have received many questions on whether buyers can still benefit from the stamp duty ‘holiday’ even if they have started the process of buying a property. Fortunately, you only have to pay stamp duty once your purchase completes. That means that if you have already started the process but haven’t reached completion yet, you can still benefit from the ‘holiday’ so long as the transaction completes by 31 March 2021. In most cases, an SDLT return is sent to HMRC and the tax is paid within 14 days of completion of the purchase. There are certain expectations to this where you don’t need to send an SDLT return.
All property buyers must declare the circumstances of any land transaction to HMRC. SDLT is payable when you:
- Buy a freehold property
- Buy a new or existing leasehold
- Buy a property through a shared ownership scheme
- Are transferred land or property in exchange for payment, e.g. you take on a mortgage or buy a share in a house.
You don’t have to pay SDLT under certain circumstances, such as:
- When no money changes hands for a land or property transfer
- When property is transferred because of divorce or dissolution of a civil partnership
- When the property is inherited under a Will
- When a freehold property is purchased for less than £40,000
- Upon the purchase or assignment of a lease of 7 years or more, so long as the premium is less than £40,000 and the annual rent is less than £1,000
- Upon the purchase or assignment of a lease of less than 7 years, as long as the amount paid is less than the residential or non-residential SDLT threshold.
If you would like to buy a home during the ‘holiday’ and save money on stamp duty, our highly experienced residential property team can help.
The contents of this article are intended for general information purposes only and shall not be deemed to be, or constitute legal advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article.