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Stamp Duty Land Tax to be reduced until 31 March 2021

Posted on 08 July 2020

The government's announcement that Stamp Duty Land Tax (SDLT) is being reduced until 31st March 2021 is a welcome boost for the property market. 

In his Summer statement chancellor Rishi Sunak announced that no stamp duty will be paid on the first £500,000 of the purchase price provided that the Buyer owns no other residential property (worldwide), so until 31st March 2021 the new rates of tax will be:
 

Property SDLT rate
Up to £500,000 Zero
The next £425,000 (the portion from £500,001 to £925,000) 5%
The next £575,000 (the portion from £925,001 to £1.5 million) 10%
The remaining amount (the portion above £1.5 million) 12%

Buyers who already own another residential property will continue to pay the 3% SDLT surcharge but they will also benefit from a reduction in the overall amount payable:
 

Property SDLT rate
Up to £500,000 3%
The next £425,000 (the portion from £500,001 to £925,000) 8%
The next £575,000 (the portion from £925,001 to £1.5 million) 13%
The remaining amount (the portion above £1.5 million) 15%

Buyers should note it does not appear there is any change in the SDLT payable when buying in the name of a company, where the rate remains a flat 15% unless the property is being bought for the purposes of a property rental or trading business.

It will be interesting to see if the announcement prompts increased activity and whether buyers alone benefit from the savings as a shrewd seller may look for a higher price following the announcement.

The reduced rates also offer an additional incentive for international buyers looking to invest in UK before the 2% SDLT surcharge for non-resident buyers is introduced next April.

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