10 August 2020 - Written by Luke Cain

The new stamp duty land tax exemption

The recent announcement by the Government of a stamp duty land tax exemption (‘SDLT’) until 31 March 2021 has given welcome impetus to the market, which had already been buoyed by the Government announcement in late May supporting the opening up of the housing market after the lockdown. Conveyancers have gone from a quiet April and May to a manic June and July.

The recent exemption from SDLT is a unique opportunity to avoid a substantial (and at times complicated) tax, and if you had already been thinking about a house move, you should give consideration to bringing forward your plans to take advantage of this temporary change to the rules.

So how much is the exemption?

  • If you purchase a property for under £500,000 and are not liable to the SDLT higher rate, then you pay no SDLT;
  • If you purchase a property for more than £500,000, and are not liable to the SDLT higher rate, then you have to pay SDLT, but only on that part of the price which exceeds £500,000. Therefore there is still a substantial saving to be made;
  • If you buy a property where the higher SDLT applies (for example, a second home/buy-to-let), then you pay the higher rate element, but you do not need to pay the standard rate element of SDLT.

Therefore, up to the first £500,000, you pay SDLT at a rate of 3%, and then for the next £425,000 you pay SDLT at a rate of 8%. This still represents a substantial SDLT saving.

Our clients have been saving thousands of pounds in SDLT since the exemption was introduced.

Timescales

If you wish to benefit from the stamp duty land tax exemption, you will need to be proactive in progressing your affairs.

You need to allow at least a month or two for the marketing of the property, and then two to three months for the conveyancing process to be completed.

The Government has stated that on 1 April 2021 the reduced rates will revert to the standard rates and therefore if you are looking to move and want to avoid a stressful spring 2021, there is no time to lose.

Luke Cain is a solicitor in the Property department at Barker Gotelee Solicitors in Suffolk.

Property Solicitors – for more information on our range of legal services, please call the team on 01473 611211 or email [email protected]