Stamp duty land tax (SDLT) costs have been reduced by up to £15,000 following the UK Government announcement in the Summer Statement of a temporary reduction in the SDLT rates for residential properties purchased in England and Northern Ireland from 8 July 2020 until 31 March 2021 (inclusive). The reduction works by increasing the zero percent threshold for the 'standard' residential rate from £125,000 to £500,000, such that the first £500,000 of the price paid by individual purchasers who own no other residential property or are buying a new home and selling their old home, will be free from SDLT.
There is a corresponding change to the application of the 'surcharge' residential rates which apply to individuals buying additional dwellings ('second homes') or companies buying dwellings. For those transactions, the first £500,000 will now be chargeable at 3%.
For individuals, the amount of the purchase price above £500,000 will then be charged at the relevant rates as before (ie 5%/8% up to £925,000,10%/13% on the next £575,000 and 12%/15% on any amount over £1,500,000, depending on whether the standard or second homes rates apply).
In overview, the reduction should result in purchasers of wholly residential property saving up to £15,000 in SDLT.
The reduction should be welcomed as a helpful stimulus to the housing sector and the economy more generally, not only in providing assistance to those people wishing to move house, but also to associated businesses such as conveyancers, surveyors, removal companies etc as well as investors in the sector.