Reduced Rates Of SDLT For Residential Properties

Publication Date24 May 2021
SubjectReal Estate and Construction, Tax, Conveyancing, Property Taxes
Law FirmRadcliffesLeBrasseur
AuthorMr Jonathan Shankland and Jeremy Crouch

The March 2021 Budget extended the Stamp Duty Holiday which will now end on 30 June 2021 with a further transition period for the nil rate band. This briefing explains the changes made to Stamp Duty Land Tax (SDLT) during the pandemic and the tax changes for property purchasers this year. This is part of a series of briefings on SDLT - click here for our briefings on the changes introduced last year, the impact of changes on second property purchasers and considerations for non-UK resident property purchasers.

On 8 July 2020, the Chancellor of the Exchequer announced a temporary cut in SDLT. This was part of the Government's response to the Coronavirus pandemic and to help address its effect on the economy, The threshold below which no SDLT is payable was raised from '125,000 to '500,000. Thresholds for the 5%, 10% and 12% "steps" were kept the same so the effect on the purchase of a '2 million property was:

Pre 8 July 2020:

'0 - '125k 0% '0

'125k - '250k 2% '2,500

'250k - '925k 5% '33,750

'925k - '1.5mill 10% '57,500

'1.5mill - '2 mill 12% '60,000

Total '153,750

Post 8 July 2020:

'0 - '500k 0% '0

'500k - '925k 5% '21,250

'925k - '1.5 mill 10% '57,500

'1.5 mill - '2 mill 12% '60,000

Total '138,750

The major beneficiaries of this tax "holiday" were those purchasing in the mid-range of the market where a property bought for '500,000 would pay no SDLT rather than '15,000. The holiday was set to end on 31 March 2021.

During the first national lockdown there was a fall of 50% in residential property transactions. However, the SDLT changes combined with a lack of housing stock available led to Nationwide's December 2020 house price index reporting annual house price growth at a six year high of 7.3%.

As with any temporary change, it is much easier to decide when to start it than when to end it...

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