New Stamp Duty Holiday Residential & Buy to Let Rules
Stamp Duty Land Tax (SDLT) cut could cost the government as much as £3.8bn in revenue.
“The government will temporarily increase the Nil Rate Band of Residential SDLT, in England and Northern Ireland, from £125,000 to £500,000,” HM Treasury said. “This will apply from 8 July 2020 until 31 March 2021 and cut the tax due for everyone who would have paid SDLT.
“Nearly nine out of ten people getting on or moving up the property ladder will pay no SDLT at all.” It estimated that the average stamp duty bill will fall by around £4,500.
The stamp duty cut announced in today’s budget will also apply to those buying second homes and buy-to-let properties.
Government documents published following the Chancellor’s speech this afternoon state that the tax relief for properties worth up to £500,000 will apply for those buying a first or subsequent property.However, the 3 per cent surcharge for buying additional properties will apply in addition to the new standard rates.
Therefore, for purchases in addition to a first home, just 3 per cent will be paid for properties valued at up to £500,000, as opposed to the 5 per cent paid before the adjustment.After that, rates will apply as follows:
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%
The relief will also be applicable for properties to which inheritance tax applies.
Please see examples below –
If you have a client with a purchase for £425,000 and this is their only property they will not be charged any SDLT. (this is a purchase under £500,000)
£425,000 Purchase 2nd Property
If you have a client purchasing a 2nd property they will be charged 3% SDLT £12,750
If you have a client with a purchase for £530,000 and this is their only property they will be charged 5% of £30,000 (This is a purchase over £500,000) you will be charged anything over £500,000.
This only applies to properties in England and Northern Ireland and it will help open the property market and facilitate the market upwards.
As always when it comes such Stamp Duty matters you should seek professional tax advice.