Loading…

Summer economic update 2020: Stamp Duty holiday

Rishi Sunak announced in his summer economic update on 8 July 2020 that there will be a temporary cut in Stamp Duty Land Tax (SDLT) for individuals purchasing residential properties valued up to £500,000, until 31 March 2021. 

Last updated 8 July 2020

As has often been the case in the past, there was much speculation that the Chancellor would announce a change to SDLT in order to reignite the residential property market which has grinded to a halt due to the economic fallout caused by the COVID-19 pandemic. As SDLT is a transaction tax, the Chancellor has the power to cut the rate of SDLT with immediate effect, so preventing a possible delay in transactions if it were to be announced and not implemented till later in the year.

This SDLT holiday operates by providing a temporary increase of the SDLT threshold from £125,000 to £500,000.

The good news is that the SDLT holiday will last until 31 March 2021. This gives prospective homebuyers nine months to take advantage of this relief.

SDLT is one of the major costs that people have to consider when they are either buying their first home or moving home. By increasing the SDLT threshold it may get the housing market moving again as individuals take the opportunity to move. On a £500,000 home, the SDLT due would have been £10,000 for a first time buyer, £15,000 for those who have previously owned a home, and £30,000 for those purchasing a second home. Those purchasing a second home will still have to pay the additional 3% on the entire purchase of the property.

For SDLT purposes, the effective date of the transaction is the date of completion, so individuals looking to take advantage of this relief need to complete (not just exchange contracts) by 31 March 2021.

It is worth noting that the “Stamp Duty Holiday” only applies to residential properties situated in England and Northern Ireland. From April 2018, SDLT was replaced by Land and Buildings Transaction Tax (LBTT) in Scotland and Land Transaction Tax (LTT) in Wales, which unfortunately do not benefit from the holiday. 

With the thought of increased taxes in the forefront of people’s minds, the government have taken a radical approach in helping the property market. This of course means the treasury will receive less revenue from the SDLT on property transactions; however, homeowners will be able to use the money saved in SDLT to invest in the ancillary services that come with moving house such as estate agents, solicitors / conveyancers, removal companies, and the retail sector – all of which have been hit hard by the pandemic.

It seems that this announcement has the potential to jump start the property market; however, the danger will be that vendors will build the SDLT reduction into their property prices.  

Speak to an expert

If you would like to speak to an expert about this or any of the topics covered in the Summer economic update, please fill out the form below and a member of our team will be in touch.

About the author

Akin Coker

+44 (0)20 7556 1332
cokera@buzzacott.co.uk

Last updated 8 July 2020

As has often been the case in the past, there was much speculation that the Chancellor would announce a change to SDLT in order to reignite the residential property market which has grinded to a halt due to the economic fallout caused by the COVID-19 pandemic. As SDLT is a transaction tax, the Chancellor has the power to cut the rate of SDLT with immediate effect, so preventing a possible delay in transactions if it were to be announced and not implemented till later in the year.

This SDLT holiday operates by providing a temporary increase of the SDLT threshold from £125,000 to £500,000.

The good news is that the SDLT holiday will last until 31 March 2021. This gives prospective homebuyers nine months to take advantage of this relief.

SDLT is one of the major costs that people have to consider when they are either buying their first home or moving home. By increasing the SDLT threshold it may get the housing market moving again as individuals take the opportunity to move. On a £500,000 home, the SDLT due would have been £10,000 for a first time buyer, £15,000 for those who have previously owned a home, and £30,000 for those purchasing a second home. Those purchasing a second home will still have to pay the additional 3% on the entire purchase of the property.

For SDLT purposes, the effective date of the transaction is the date of completion, so individuals looking to take advantage of this relief need to complete (not just exchange contracts) by 31 March 2021.

It is worth noting that the “Stamp Duty Holiday” only applies to residential properties situated in England and Northern Ireland. From April 2018, SDLT was replaced by Land and Buildings Transaction Tax (LBTT) in Scotland and Land Transaction Tax (LTT) in Wales, which unfortunately do not benefit from the holiday. 

With the thought of increased taxes in the forefront of people’s minds, the government have taken a radical approach in helping the property market. This of course means the treasury will receive less revenue from the SDLT on property transactions; however, homeowners will be able to use the money saved in SDLT to invest in the ancillary services that come with moving house such as estate agents, solicitors / conveyancers, removal companies, and the retail sector – all of which have been hit hard by the pandemic.

It seems that this announcement has the potential to jump start the property market; however, the danger will be that vendors will build the SDLT reduction into their property prices.  

Speak to an expert

If you would like to speak to an expert about this or any of the topics covered in the Summer economic update, please fill out the form below and a member of our team will be in touch.

Get in touch
Please complete all required fields above.
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.
close back
Your search for "..."
did not yield any results.
... results for "..."
Search Tags