Stamp Duty Land Tax (‘SDLT’) ‘Holiday’ Announced: But what does it mean?

The Chancellor has today announced that there will be an 8 month temporary cut in SDLT with no charge on ‘any’ residential property transactions with a value under £500,000, by lifting the SDLT threshold from £125,000 to £500,000.  This will result in an average saving of £4,500, (and a possible total saving of £15,000 per transaction), which will no doubt be welcome news to many thousands of people.  The government claims that this will mean 9/10 main home buyers will not pay SDLT. 

The ‘Holiday’ will take effect immediately from July 8, 2020, until March 31, 2021.  The Chancellor hopes this will incentivise the property market to move during the ‘Holiday’ and carry that momentum thereafter.

However, in practice what will this mean for anyone dealing with a property transaction below £500,000?  Here is a summary of some of the main points:

1. It only relates to residential property transactions, by way of an increase in the first SDLT threshold from £125,000 to £500,000.  Meaning the first £500,000 is subject to 0% SDLT, thereafter the original rates continue to apply;
2. The ‘additional homes’ surcharge of 3% will still continue to apply.  Therefore, if you are buying a second property you will still be liable for the 3% ‘additional residential properties’ surcharge.  However, this will apply across the newly increased threshold.  Meaning up to £500,000 only 3% SDLT is payable.
3. Companies as well as individuals buying residential property worth less than £500,000 will also benefit from these changes (although will still be subject to the ‘additional homes’ 3% surcharge) , as will companies that buy residential property of any value above £500,000 where they meet the relief conditions from the corporate 15% SDLT charge.

For more information please see: https://www.gov.uk/guidance/stamp-duty-land-tax-temporary-reduced-rates