TT353: SDLT – complete your residential purchase soon to save £2,500!

SDLT – complete your residential purchase soon to save £2,500!

In June 2020 the government temporarily increased the nil rate band for Stamp Duty Land Tax (SDLT) on residential property purchases in an attempt to boost activity in the UK housing market, which had been badly affected by the COVID-19 pandemic. That temporary nil rate band increase (from £125,000 to £500,000) was due to end on 31 March 2021 but this was extended until 30 June 2021. In addition, instead of the nil rate band reverting in full (to £125,000) on 30 June 2021, the government also allowed for a further extension of the nil rate band until 30 September 2021 albeit at a lower threshold of £250,000 (not £500,000). From 1 October 2021 the nil rate band reverts fully to £125,000 with all pre COVID-19 prevailing rates and bands of SDLT applying thereafter.

So you need to complete your residential property transaction quickly if you want to benefit.

Since the rate of SDLT on purchases between £125,000 and £250,000 is ordinarily 2%, the effect of the extended nil rate band means that any residential property purchase completed by 30 September 2021 will save £2,500 in SDLT – assuming the purchase price is at least £250,000 – compared to a transaction completed on or after 1 October 2021.

Proportionately the saving is not as significant as that which applied before 30 June 2021, which saved SDLT at a higher rate of 5% on the amount between £250,000 and £500,000 – but it is nevertheless worth having.

If you’re a first time buyer there’s no rush – that’s because you will already benefit from an effective £300,000 nil rate band.

Different rates of SDLT also apply if you own more than one property or if you’re a company. Here, typically a 3% surcharge applies to all SDLT band rates but you will still benefit from the extended nil rate band until 30 September 2021.

And of course, the above only applies to residential purchases.

SDLT can be quite complex, particularly for companies and non-UK residents. If you wish to discuss your SDLT transaction further please then do not hesitate to contact your Barnes Roffe contact partner.