The UK Chancellor of the Exchequer, Rishi Sunak, has announced a temporary payment holiday on Stamp Duty Land Tax (SDLT) to get the property market back on track following a sharp fall in transactions over the last few months because of Coronavirus pandemic.
The Chancellor has reported that that UK economy has shrunk by 25% in two months during this crisis. That is more than our economy has grown in the previous 18 years . With the harshness of those statistics, it is hoped that these changes to SDLT will kick-start the housing market.
The changes come earlier than expected, with views that leaving the changes to the autumn budget would put the housing market under more pressure, with buyers holding off until certainty was given as to what these SDLT changes would look like.
What are the SDLT Changes?
- The Government has raised the level at which SDLT is charged from £125,000 to £500,000 for property sales in England and Northern Ireland.
- The temporary payment holiday will take effect immediately and run until 31st March 2021. Any deals on property purchases must be completed before 31st March 2021 in order to qualify for the payment holiday.
- Applicable to a main residence only.
First Time Buyers: they do not pay SDLT on property prices up to £300,000 outside of London. However, further relief is available for those purchasing within more expensive areas like London, up to the purchase price of £500,000. 5% is charged on any portion between £300,000 and £500,000.
If you’ve purchased a home before:
2% on £125,001-£250,000,
5% on £250,001-£925,000,
10% on £925,001-£1.5m, and
12% on any value above £1.5m.
Owners of additional properties and Landlords: An extra 3% of SDLT on the rates above in England and Northern Ireland.
The legal sector is likely to be aware of these changes and taking appropriate steps to digest the information and devise a plan on how to relay the changes to clients. With that in mind, here are some helpful points to consider:
- Provide training to all lawyers and staff members within the team involved in the process, which includes accounts staff, as it is likely they will be the ones sending the SDLT payments to HMRC.
- Review all Letters of Engagement / Terms of Business Agreements and Retainers relevant to this area of discipline, in order to revise the necessary content to reflect the changes, and include the deadline date of 31 March 2021.
- Circulate information relating to the SDLT changes to all existing clients, those that are selling, purchasing and renting as well as developer clients.
- With the above in mind, inform existing and any new client instructions of these changes.
If you would like to discuss this article further then please contact Nicola Anthony using the details below.
Note that this material is for general information purposes only. This article is not legal or formal advice in relation to the Stamp Duty Land Tax changes.