insideKENT Magazine Issue 100 - August 2020 | Page 94
FINANCE
Homebuyers,
SDLT Holiday
Until Spring 2021
By Rick Schofield, Partner, Wilkins Kennedy
THE CHANCELLOR ANNOUNCED ON 8 JULY 2021 AN IMMEDIATE INCREASE IN THE NIL
RATE BAND OF STAMP DUTY LAND TAX TO £500,000. THIS WILL BE VERY WELCOME NEWS
TO HOMEBUYERS AS OVER 80% OF HOME PURCHASES WILL NOT NEED TO PAY ANY SDLT
IF PURCHASED BEFORE 31 MARCH 2021. FOR A HOME PURCHASED FOR £500,000, THE
SDLT SAVING IS WORTH £15,000, AND FOR THE AVERAGE HOUSE PURCHASE IN ENGLAND
OF £247,000, HOMEBUYERS WOULD SAVE £2,440.
However, the 3% surcharge applicable to the purchase of second homes, by
individuals and all purchases by businesses, will continue. The 15% flat super
rate for purchases by corporates is unchanged where the purchase price is over
£500,000.
The rates for SDLT on a residential purchase are now:
Property Value
£
0-500,000
500,001 – 925,000
925,001 - 1,500,000
Normal
rate
0
5%
10%
3% surcharge
for additional rate
3%
8%
13%
March 2021. This may mean early
payment of the SDLT but would
secure the reduction currently
available.
Multiple Dwellings Relief
The SDLT holiday also applies to
purchases where a claim for Multiple
Dwellings Relief is being made.
However, care needs to be taken to
see if a claim is still the right route as
the minimum 1% SDLT charge still
applies if Multiple Dwellings Relief is
claimed.
Mixed Use property
HMRC have been taking a keen
interest in claims for ‘mixed use’
property (say a country house with
only a modest area of field attached)
as the SDLT payable with a claim for
mixed use was often less than at the
residential rates, particularly for
purchases liable to the 3% surcharge.
The benefits of securing mixed use
may not be worthwhile if the purchase
price is less than £1,215,000.
1,500,001 +
What the changes mean –
some scenarios
12%
If you completed your house purchase on 7
July, can you claim a reduction in the SDLT
payable?
Unfortunately, not. The new rules
only apply to purchases completing
on or after 8 July 2020 until 31 March
2021.
If you exchanged contracts on 7 July but are
not completing until 1 November 2020, can
you benefit?
15%
Yes, you will be able to benefit from
the reduction, as SDLT is triggered
by substantial performance of a
contract, which is usually taking
possession of a property.
If you are exchanging contracts for a new
build purchase on 10 July 2020 but will
not complete until 1 June 2021, will you
benefit from the reduction in SDLT?
No, as the purchase is not completing
by 31 March 2021. What can be
looked at is to trigger substantial
performance of the purchase by 31
Contact Us
For more information regarding the proposed SDLT and other changes announced
by the Chancellor in his Summer Statement, please contact us:
[email protected]
Local offices:
Ashford: 01233 629 255 / Canterbury: 01227 454 861
Maidstone: 01622 690 666 / Orpington: 01689 827 505
Sandwich: 01304 249 997
[email protected]
www.wilkinskennedy.com
wilkinskennedy
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