Stamp Duty Land Tax: Temporary Reduced Rates for Residential Purchases

Due to the Current pandemic which has affected every country globally, the UK government introduced temporary changes to the Stamp Duty Land Tax (SDLT) effective from the 8^th July 2020 until 31^st March 2021.

The temporary SDLT change which has been introduced is to increase the 0% band for properties worth up to £500,000.00

For example, if you were to purchase a property now for £500,000.00 or less, there would be no SDLT tax to pay if you were a first-time buyer or moving house, whereas previously you would have had to pay £15,000.00 in SDLT on a purchase of a house for £500,000.00.

Temporary rates on purchases completing between 8^th July 2020 until 31^st March 2021:

Property Value:                                                          SDLT Rate:

Up to £500,000                                                           0%

£500,001 to £925,000                                                 5%

£925,001 to £1.5 million                                            10%

Over £1.5 million                                                        12%

If you were purchasing an additional property however, you would still be liable to pay an additional rate, called the higher rate of 3% of the purchase price for any purchase over £40,000.00 as shown below

Higher rates for additional properties:

Property Value:                                                          SDLT Rate:

£40,001.00 to £500,000                                              3%

£500,001 to £925,000                                                 8%

£925,001 to £1.5 million                                            13%

Over £1.5 million                                                        15%

This temporary change does appear to have had an effect on the property market as many homeowners can use this opportunity to avoid large SDLT fees and can benefit by being able to afford to purchase their dream homes, whereas before, the SDLT fees may have priced them out of a potential purchase.

The change may also be helping boost the economy as the SDLT change may leave new purchasers with some extra funds to spend on their property. They could purchase new whitegoods, curtains, blinds, carpets, etc which will help business and the economy, during this current crisis.

Our Conveyancing team at Johnson Astills can assist you in your next purchase and provide you with further information regarding any conveyancing queries. Please contact us at our Leicester Office or Loughborough Office on 0116 2554855 or 01509 610312