Rishi Sunak’s SDLT Holiday

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It was announced in Chancellor Rishi Sunak’s Economic Statement on 3 March 2021 that individual(s) buying their main home will not have to pay Stamp Duty Land Tax (“SDLT”) for a purchase price of up to £500,000.

Please see below a summary of key questions and our views on the same.

What are the SDLT rates now?

For the purchase of a freehold main residence or purchase of an existing leasehold property the SDLT rates are now:

Property or lease premium or transfer valueSDLT rate
Up to £500,000Zero
£500,001 to £925,0005%
£925,001 to £1.5 million10%
Anything over £1.5 million12%

For the grant of a new leasehold main residence the SDLT rates are now:

Net Present Value of any RentSDLT rate
Up to £500,000Zero
Over £500,0001%

* the Net Present Value is calculated using a formula set by HMRC taking into account certain terms of lease.

What if the purchase price is more than £500,000? How much SDLT do I have to pay?

If say your purchase price is £750,000, this would normally result in a SDLT liability of £27,500 but under the new changes the SDLT will be £12,500 which would be calculated as:

Property or lease premium or transfer valueSDLT rate
Up to £500,000Zero
£500,001 to £750,0005% (which would equate to £12500,)

When does it end?

  • The SDLT holiday threshold will reduce from £500,000 to £250,000 on 1 July 2021
  • Then it will reduce again to £125,000 on 1 October 2021 effectively bring the SDLT holiday to an end

Does the SDLT holiday apply to buy to let properties or second homes?

No, the SDLT holiday will only be applicable for people buying their main residence. As such, the additional rate SDLT will still be payable for buy to let properties and second/holiday homes. However as the additional rate is 3% in addition to the usual SDLT rates it would mean that if you purchase a buy to let or holiday home between 8 July 2020 and 31 March 2021 then your SDLT liability could be lower than what it used to be.

The new (total) SDLT rates for additional properties are:

Property or lease premium or transfer valueSDLT rate
Up to £500,0003%
£500,001 to £925,0008%
£925,001 to £1.5 million13%
Anything over £1.5 million15%

I purchased my home before 8 July can I apply for a refund?

The Chancellor Rishi Sunak announced that the change to the SDLT threshold for buying a new home was effective immediately on 8 July 2020. There is no guidance as yet to state that if you purchased your new home on say 7 July 2020 for a purchase price of £400,000 whether you would be entitled to claim a refund for the SDLT payable. Until the Government produces any further rules or guidance to the contrary it would appear to be the case that the SDLT must be paid in full for any properties purchased before 8 July 2020.

I purchased my main home but haven’t yet sold my previous main residence – does the SDLT holiday apply to me?

Under the SDLT rules if you do not sell your main residence on or before the date that you purchase your main residence then you would be liable to pay full SDLT and also pay an additional rate SDLT of a further 3%. You could (subject to complying with certain conditions) later apply for a refund of the additional 3% SDLT rate that you paid when you then sell the previous main residence.

You would still be able to use this process to reclaim the additional SDLT paid (subject to complying with certain conditions). We offer a fixed price service for applying for refunds of additional rate SDLT that is paid and we would be more than happy to help you should you require such assistance.

I am buying a residential property using a company – does the SDLT holiday apply to me?

HMRC’s guidance states that companies as well as individuals buying residential property worth less than £500,000 will also benefit from the SDLT holiday however no further guidance was published as at 5pm on 8 July 2020 and we will update our guidance on the position once the same is available.

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