The announcement by Chancellor Rishi Sunak to increase the threshold at which Stamp Duty Land Tax is paid has opened the door to thousands of pounds worth of savings for home buyers.
What is Stamp Duty Land Tax?
Stamp Duty Land Tax, or SDLT, is the levy charged by the government when you buy a property.
You pay the tax when you:
- buy a freehold property
- buy a new or existing leasehold
- buy a property through a shared ownership scheme
- are transferred land or property in exchange for payment, for example you take on a mortgage or buy a share in a house
When do I pay SDLT?
SDLT is due on completion of purchasing your home. Your legal representative will advise you of what you owe and will ensure the relevant paperwork is complete to enable payment. They will also make the payment on your behalf.
How much will SDLT cost?
Prior to the announcement, SDLT was applicable when you bought a property for more than £125,000 and £300,000 if you are a first-time buyer.
SDLT is calculated as follows:
- The portion between £125,001 and £250,000 is taxed at 2%
- The portion between £250,001 and £925,000 is taxed at 5%
- The portion between £925,001 and £1.5 million is taxed at 10%
- The remaining amount, above £1.5 million, is taxed at 12%
What has changed?
On 8th July 2020 the government announced a Stamp Duty holiday, increasing the threshold at which SDLT is due from £125,000 to £500,000.
From 8th July 2020 to 31st March 2021 the calculation is as follows:
- Up to £500,000 is taxed at zero
- The next £425,000 (the portion from £500,001 to £925,000) is taxed at 5%.
- The next £575,000 (the portion from £925,001 to £1.5 million) is taxed at 10%
- The remaining amount (the portion above £1.5 million) is taxed at 12%
The second homes surcharge (an additional levy for purchases which are not the homeowners only property) stands at 3% and is still applicable in all cases.
There may be cases where you have not sold your main property prior to exchange on the second property which will incur the additional levy.
In such cases you can apply for a refund as long as you sell your main residence within 36 months.
Services from legalmatters during Covid-19 pandemic
Here at legalmatters, we continue to do everything we possibly can to service our existing and new clients during these very difficult times.
Our ability to provide remote services makes us stand out from the crowd. With legalmatters, your will, power of attorney, probate, trust and tax advice, conveyancing and legal services for business owners, can all be dealt with over the phone, by video conference or by email and documents are sent to you by post. We are also advising our clients on signature processes bearing in mind social distancing measures.
Meanwhile, the office continues to operate with minimal skeleton staff for the protection of our staff, clients and visitors, enabling us to still process physical documents for our clients. If you do find that you need to call into the office for instance to have documents witnessed when it is otherwise difficult for you to arrange that with family and friends then do please get in touch.
For more information about SDLT changes please speak to one of our expert Conveyancers, ring us on 01243 216900 or email us at email@example.com.