Stamp Duty Land Tax: Update

On 8 July 2020 the Chancellor the Exchequer announced a reduction to the rates of SDLT which apply to the purchase or residential property in England. 

Reduced Rates

Following the introduction of the new rates, a purchaser which completes a purchase of residential property in England between 8 July 2020 and 31 March 2021 will only pay SDLT on consideration above £500,000. 

Property or lease premium or transfer value	SDLT rate
Up to £500,000 Zero	0%
The next £425,000 (the portion from £500,001 to £925,000)	5%
The next £575,000 (the portion from £925,001 to £1.5 million)	10%
The remaining amount (the portion above £1.5 million)	12%

Please use this LINK to access the HMRC SDLT calculator

Savings

The new rates mean that for purchaser of residential property for a price of £500,000 or above will save £15,000. Purchasers of properties for less than £500,000 will benefit proportionally as can be seen from the table below.

Price	SDLT Liability Rates - Pre 8 July Rates	SDLT Liability Rates from 8 July to 31	Saving
£500,000	£15,000	£0	£15,000
£400,000	£13,750	£0	£13,750
£300,000	£8,750	£0	£8,750
£200,000	£3,750	£0	£3,750

First Time Buyers

These new rates apply to both first time purchasers and purchasers that have owned homes before. 

From 8 July 2020 to 31 March 2021 the rules that had previously applied to first time purchasers are replaced by the new reduced rates set out above.

Higher 3% rate for Second Homes and Companies/LLP’s acquiring residential property 

Purchasers of second homes and companies/LLPs purchasing residential property in England prior to the end of March 2021 will also benefit from the reduced rates albeit the existing 3% higher rate pf SDLT will continue to apply on top of revised standard rates referred to above until 31 March 2021. 

Companies/LLPs seeking to benefit from the reduced rates (such as property developers and property rental business) must first meet the conditions for relief from the 15% rate of SDLT. 

Points to note

• There are no changes to the SDLT rates applicable to commercial property. 
• The reduced rates only apply to transactions which COMPLETE between 8 July 2020 and 31 March 2021. Contracts which exchange during this period but where completion occurs after 31 March 2021 will NOT benefit from the reduced rates under the current guidance.
• Purchasers may wish to accelerate purchases already under contract to ensure completion occurs on or before 31 March 2021.
• Purchasers buying in early 2021 will need to take great care to complete before the end of March 2021 so will need to ensure their related sales and mortgage arrangements are all in good order in ample time. Solicitors should be instructed early. 31 March 2021 is likely to be a busy day!
• Purchasers relying on Help to Buy will need to be extra careful to ensure that the Help to Buy funds are made available on or before 31 March 2021.
• Sellers who are contractually bound to complete on or before 31 March 2021 and fail to do so causing their purchaser to miss the SDLT savings can expect to have to compensate the purchaser.

Boyes Turner’s Development and House Building Team advise a wide range of commercial and residential developers, land traders, promoters, funders and land owners across England and Wales.