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Temporary increase in residential SDLT threshold

To help boost the housing market and allied sectors, the residential Stamp Duty Land Tax (SDLT) threshold in England and Northern Ireland has been increased from £125,000 to £500,000 for a temporary period from 8 July 2020 to 31 March 2021. Increases have also been announced to the residential thresholds for Land and Buildings Transaction Tax (LBTT) in Scotland and Land Transaction Tax (LTT) in Wales.

Residential SDLT rates

The rates of residential SDLT applying from 8 July 2020 to 31 March 2021 are as shown in the following table.

Property value Main home Additional properties
Up to £500,000 Zero 3%
Next £425,000 (£500,001 to £925,000) 5% 8%
Next £575,000 (£925,001 to £1.5 million) 10% 13%
The remaining amount (over £1.5 million) 12% 15%

The nil rate band that applies to the net present value of any rents payable for residential property is also increased to £500,000 for the same period. Where the net present value is more than £500,000, SDLT is charged at the rate of 1% on the excess.

On 1 April 2021, the rates and thresholds will revert to those applying prior to 8 July 2020.

Additional properties

The increase in the residential SDLT threshold will also benefit those looking to purchase second homes and investment properties, such as buy-to-let properties. The 3% supplement, which applies where the consideration is £40,000 or more, is added to the residential rates, as reduced. Consequently, those completing on second and subsequent homes between 8 July 2020 and 31 March 2021 will pay SDLT at 3% on the first £500,000 of the consideration.

First-time buyers

Prior to 8 July 2020, first-time buyers enjoyed a higher SDLT threshold of £300,000, as long as the consideration for the purchase was not more than £500,000. From 8 July 2020 to 31 March 2021, first-time buyers will pay SDLT at the residential rates, as reduced. The reduction will benefit first-time buyers purchasing properties for more than £300,000.

Non-residential and mixed-use properties

The increase in the threshold only applies to residential properties – the threshold for non-residential and mixed-use properties remains at £150,000.

Scotland

The starting threshold for LBTT in Scotland is increased from £145,000 to £250,000 from 15 July 2020 until 31 March 2021. The additional property supplement of 4% in Scotland is payable on top of the reduced residential rates.

Wales

Taxpayers buying residential property in Wales will benefit from a reduction in LTT as the LTT residential property threshold is increased from £180,000 to £250,000 from 27 July 2020 until 31 March 2021. However, unlike the rest of the UK, the higher threshold does not apply to additional properties – the 3% supplement is added to the residential rates applying immediately prior to 27 July 2020, rather than to the reduced rates as is the case in the rest of the UK.

Talk to us

Speak to us to find out how much you could save by completing your residential property purchase by 31 March 2021.