Quick action required to take advantage of the stamp duty holiday

The extended stamp duty holiday means no stamp duty land tax (SDLT) is payable on the first £500,000 of property purchases in England and Northern Ireland.

Note first-time buyers were not subject to SDLT if the property was valued at £300,000 or below. However, from 8 July 2020 to 30 June 2021 they can buy property valued at up to £500,000 without incurring stamp duty.

It is, however, important to remember that anyone purchasing an ‘additional’ residential property will be charged a 3% surcharge on each of the threshold bands. This means that those buying a second property to let out will also benefit from the stamp duty holiday but will need to pay the 3% surcharge.

In addition, companies buying residential property for less than £500,000 between 8 July 2020 and 30 June 2021 will benefit from the Government changes, as will companies that buy residential property of any value when they meet the relief conditions from the corporate 15% stamp duty land tax charge.

These rates apply whether an individual is buying their first home or if they have owned property before and are as follows:

 Then, from 1 July 2021 until the end of September 2021, this amount will be reduced to £250,000 as follows:

From 1 October 2021, the stamp duty rates are expected to return to normal: 

Since the pandemic hit, it was very difficult for property transactions to take place while the country was in lockdown. However, in England and Northern Ireland, housing market activity returned on 12 May and 15 June 2020, respectively, and, as mentioned above, the stamp duty holiday was initially introduced in July 2020. As a result of this, over more recent months, HMRC’s property statistics have shown that there has been an increase in property transactions which is a likely to be linked to the stamp duty holiday.

Case study

Brenda owned a semi-detached house in Loughborough for a number of years. Six months ago, she decided to relocate to Brighton and is currently living in rental accommodation. She has recently sold her Loughborough property as she would like to buy a place in Brighton. There is no capital gains tax to pay on the sale of her Loughborough property as the capital gain is covered by the private residence exemption. She does not own any other property at the current time.

So, what SDLT savings can Brenda make depending on the purchase price of her new property and when she completes the purchase?

The 30 June 2021 deadline is fast approaching, although the above figures show that there are still significant savings to be made. If completion can take place by the 30 June deadline the SDLT saving is £12,500 compared to completing on or after 1 July, and £15,000 compared to completing on or after 1 October. The saving falls to £2,500 if completion takes place between July and September compared to completing on or after 1 October.

Note that the Welsh Government’s temporary £250,000 Land Transaction Tax 0% band for residential property also ends on 30 June, in line with the timing of the end of the £500,000 SDLT 0% band. However, in Scotland, the Land and Buildings Transaction Tax enhanced 0% band of £250,000 ended on 31 March, and was replaced by a 0% band of £145,000.