On 8 July the chancellor, Rishi Sunak, announced a temporary holiday on stamp duty land tax (SDLT) payable on the first £500,000 of property purchases in England. The holiday came into immediate effect and will end on 31 March 2021. The intended aim of this holiday is to boost the property market after flagging over last quarter and to help potential buyers struggling after the effects of the coronavirus pandemic.
SDLT is a form of tax paid by buyers upon the purchase of property. The amount of stamp duty payable varies according to the price paid for a property.
Prior to 08 July 2020, the various levels of SDLT looked like this:-
| Property value | SDLT rate |
| Up to £125,000 | Zero |
| The next £125,000 (the portion from £125,001 to £250,000) | 2% |
| The next £675,000 (the portion from £250,001 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% |
Between 08 July 2020 and 31 March 2021 the following rates will apply:-
| Property value | SDLT rate |
| Up to £500,000 | Zero |
| 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% |
The obvious benefit of the temporary change of rates means that buyers completing on the purchase of a main residence of up to £500,000 in value will not pay any SDLT. It is estimated that the SDLT holiday will help nearly 9 out of 10 people buying a property and that the average SDLT payment will reduce by £4,500. It is clearly hoped that this saving will encourage a bounce back in the property market after the effects of the coronavirus.
However, it should be considered that the above rates only apply to those purchasing or replacing their main residence, not to those purchasing additional properties. Nevertheless, the chancellor has also introduced a temporary change of rates for SDLT payable on the purchase of additional properties.
Between 08 July 2020 and 31 March 2021 the following rates will apply for purchasing additional properties:-
| Property value | SDLT rate |
| Up to £500,000 | 3% |
| The next £425,000 (the portion from £500,001 to £925,000) | 8% |
| The next £575,000 (the portion from £925,001 to £1.5 million) | 13% |
| The remaining amount (the portion above £1.5 million) | 15% |
Matt Collis, a specialist residential property solicitor, has shared his thoughts on the announcement: “the stamp duty holiday is a great announcement for residential purchasers and will have a significant impact for many buyers. At the very most, those looking to buy a property for £500,000 will be saving £15,000 in stamp duty.”
Matt is also positive about getting stuck into a new wave of instructions following the chancellor’s announcement and further easing of lockdown:
“It’s obviously anticipated that the temporary change of rates will lead to an increase in residential sales and instructions, which we’re all more than ready for. Despite having social distancing measures in place, we’re here to see “property done properly” for our clients.
Matt recently joins Blanchards Bailey from a firm in the south of Dorset and oversees residential property sales in the firm’s Shaftesbury office.
The conveyancing department at Blanchards Bailey now boasts 11 lawyers, backed by a highly knowledgeable and skilled support team including two experienced fee-earning assistants undertaking training towards professional qualifications. Although the offices remain closed to walk in appointments for the time being, property lawyers are working in all offices across the firm daily.
For any questions relating to residential property sales or SDLT, contact Matt Collis or one of the residential property team on 01258 459361.
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