Buyers: Stamp Duty Land Tax
Good news for buyers as the chancellor recently announced a temporary increase in the Stamp Duty Land Tax (SDLT) threshold which will last until 31 March 2021. Although the temporary increase in the SDLT threshold to £500,000 was aimed at those buying their main residence, it also benefits those buying a second or subsequent property where there is a 3% supplementary charge. Thus, the rate of SDLT on a second home costing up to £500,000 is now 3%. Previously, the rate was 3% up to £125,000, then 5% up to £250,000 and then 8% up to £825,000. So, the SDLT on a second home costing £400,000 is now £12,000 compared to £22,000 if the purchase had completed before 8 July 2020.
The increase in threshold also applies to overseas investors and in some cases to companies that rent out the property or develop it.
After 31 March 2021, it is thought that SDLT rates will return to the levels that were in place before the temporary raise. However, for overseas investors, there is a planned increase of 2% on the original SDLT levels for purchases on or after 1 April 2021.
Note that there are different thresholds and rates of Land and Buildings Transaction Tax for properties located in Scotland and Wales.
If you would like further information, then please do contact us.