FAQs: The new Stamp Duty Land Tax holiday
We answer the questions most asked by our clients about the recently announced Stamp Duty Land Tax holiday.
On Wednesday 8 July, as part of its ‘Plan for Jobs 2020’ policy initiative, the Government announced a temporary increase to £500,000 of the stamp duty land tax (SDLT) nil rate threshold that applies to purchases of residential property. The change is intended to promote medium-term confidence in the property market and maintain the growing momentum since the easing of lockdown. Set out below are answers to some of the most commonly arising questions in relation to the threshold change.
The nil rate threshold has increased to £500,000 for all purchases of residential property, not just purchases of main residences. For purchases of additional residential dwellings, the surcharge continues to apply so that for this type of purchase the first £500,000 of the purchase price will not be nil rate; it will be taxed at 3%.
The new threshold applies for purchases taking place in the period from 8 July 2020 to 31 March 2021.
In the absence of an indication to the contrary, the usual ‘effective date’ rules will apply for determining when a property is deemed to be purchased for SDLT purposes. This means that the date of purchase will be the date of completion rather than the date of exchange of contracts (unless the contract has been substantially performed in the meantime by the purchaser taking possession of the property or paying a substantial amount of the purchase price).
For first time buyers, the increased threshold replaces first time buyer’s relief.
The new threshold does not just apply to purchases by individuals. It will also apply to purchases by companies, so long as the purchase in not one that attracts the top 15% SDLT rate for purchases of high value residential dwellings.
The new threshold will apply to any premium payment made by the tenant for the grant of the lease. The new threshold will also apply to the net present value figure for any rent payable under the terms of the lease.
No. The thresholds for purchases of non-residential property are unchanged.
For individuals purchasing a residential property for £500,000 or less that is not an additional dwelling, no SDLT will be payable.
For individuals, purchasing residential properties priced above £500,000, the new threshold will result in a minimum SDLT saving of £15,000 whether or not the surcharge for additional dwellings applies.
If you would like to discuss any aspect of this article further, please contact Robert Sowerby by email or call any member of the property team on 0113 244 6100.
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The information in this article is necessarily of a general nature. Specific advice should be sought for specific situations. If you have any queries or need any legal advice please feel free to contact Wrigleys Solicitors.