New Residential SDLT rates… On 8 July 2020 the Chancellor of the Exchequer, Rishi Sunak, announced that, if you purchase a residential property between 8 July 2020 to 31 March 2021, the nil rate band for the standard residential rate of Stamp Duty Land Tax (SDLT) will be increased from £125,000 to £500,000 – therefore, you only start to pay SDLT on the amount that you pay above this threshold. This applies to all individuals, whether first time buyers or not.
The new Residential SDLT rates on which you will pay Stamp Duty Land Tax will be:
|Up to £500k||0%|
|Next £425k (portion between £500,001 to £925k)||5%|
|Next £575k (portion between £925,001 to £1.5m)||10%|
|Remaining amount (the portion above £1.5m)||12%|
These new Residential SDLT rates temporarily replace first time-buyers’ relief. The changes also benefit companies and others paying the higher residential rates, for example, if you’re buying a second property, in which case the following rates apply:
|Up to £500k||3%|
|Next £425k (portion between £500,001 to £925k)||8%|
|Next £575k (portion between £925,001 to £1.5m)||13%|
|Remaining amount (the portion above £1.5m)||15%|
It is estimated that this will result in an average saving of £4,500 (and a possible total saving of £15,000 per transaction). The government also claims that this will mean that 9/10 main home buyers will temporarily not pay any SDLT.
If you’re buying a leasehold property where the calculation of any rent payable is calculated on what is known as the ‘net present value’ (i.e. the value of rent payable over the term of the lease at present day prices), then you too will also benefit from these new rules; with no SDLT payable on the net present value below £500,000, and only 1% payable for anything over.
As things currently stand, these new rates will only apply from 8 July 2020 to 31 March 2021, and on 1 April 2021 the previous SDLT rates will be reintroduced.
If you are considering purchasing a residential property, either as an individual or through a corporate vehicle (i.e. a company), and have any queries as to whether or not these new rules will apply to you, then please do not hesitate to get in touch on 01323 407555
SO Legal Solicitors Eastbourne – 01323 407555
SO Legal Solicitors Brighton & Hove – 01273 069920
SO Legal Solicitors Hastings – 01424 709050
SO Legal Solicitors Uckfield – 01825 729840
SO Legal Solicitors Notting Hill – 0203 9677700