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Stamp Duty Land Tax to be reduced until 31 March 2021

Posted on 8 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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