The UK housing market has virtually shut down during the Coronavirus lockdown and this has, in turn, affected the rest of the economy so it's no surprise the Government has stepped in and announced this SDLT threshold increase ...
Reports show that house prices have dropped slightly, so it was not much of a surprise that Chancellor Rishi Sunak announced a significant increase in the Stamp Duty Land Tax threshold in an effort to kickstart the housing market again.
This means that up to 90% of house buyers will save, on average, around £4,500. Second homeowners and property investors can qualify for the SDLT holiday, though they will still need to pay the current 3% surcharge.
SDLT is calculated on a sliding scale so there will be savings on most property transaction during the holiday period. The new thresholds are as follows:
- No stamp duty to £500,000 - 5% from £500,001 to £925,000 - 10% on £925,001 to £1.5m - 12% on any value above £1.5m
As an example, if a first-time buyer buys a house for £795,000, under the new rules, he only pays SDLT on £295,000 at 5% as the first £500,000 is free of SDLT. This means that the total liability would be £14,750. Before the rise in the threshold, it would have been £24,750 as the 5% would have been applied above the existing £300,000 threshold.
If it had not been a first time purchase, SDLT would have been applied at 2% from £125,001 to £250,000 and 5% from £250,001 up to the £795,000 cost of the property. This would have given a total liability of £29,750 whereas now, the new rules mean a saving of £15,000.
It is very understandable that the Chancellor wants to get the housing market moving again because of its effect on the rest of the economy. Now, really is a great time to get that house purchase underway so you can save on your Stamp Duty Land Tax liability.
Remember, that transactions must be fully completed before the 31st March 2021.
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