UK and International Tax news
Temporary Reduced SDLT Rates For Residential Property
Thursday 16th July 2020
In the Chancellor’s Summer Statement of 8 July 2020, reduced rates of SDLT for acquisitions of residential property that take place in the period from 8 July 2020 to 31 March 2021 were announced.
The temporary reductions in rates will be achieved for purchases by increasing the nil rate band upper threshold limit from £125,000 to £500,000, and for rents by increasing the nil rate band upper threshold limit that applies to the net present value thereof from £125,000 to £500,000.
The temporary rates apply to purchase completions or substantial performances between the above dates but it is not clear whether the reduced rates will apply where contracts are exchanged between these dates and completion occurs afterwards.
SDLT savings of up to £15,000 may therefore result from the increase in the zero percent threshold for the ‘standard’ residential rate from £125,000 to £500,000. For 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, there will be no SDLT.
There is a corresponding change to the application of the ‘surcharge’ residential rates which apply to individuals buying additional/second homes or companies buying dwellings. For these transactions, the first £500,000 will now be chargeable at 3%.
In each case, the amount of the purchase price above £500,000 will then be charged at the relevant rates as before (being 5%/8% up to £925,000,10%/13% on the next £575,000 and 12%/15% on amounts over £1,500,000, depending on whether the standard or second homes rates apply).
The rates of SDLT will revert to the prior rates and thresholds from April 2021.
If you would like more detail on the above, please contact Keith Rushen on 0207 486 2378.Contact Us