If you purchase a residential property between now and 31 March 2021, you only start to pay Stamp Duty Land Tax (SDLT) on the amount that you pay for the property above £500,000.
These rates apply whether you are buying your first home or have owned property before, but it does have to be your only property at that time.
Companies and individuals can benefit from the reduction, so long as they are buying residential property.
SDLT applies to both freehold and leasehold properties – whether you’re buying outright or with a mortgage.
The new rates until 31 March 2021 are:
- Zero percent for a property to the value of up to £500,000
- Five percent for the next £425,000 (the part from £500,001 to £925,000)
- Ten percent for the next £575,000 (the part from £925,001 to £1.5 million)
- Twelve percent for the remaining amount (the part above £1.5 million)
For example, if you buy a house for £575,000, the SDLT you owe is calculated as follows:
Zero percent on the first £500,000 = £0
Five percent on the final £75,000 = £3,750
Total SDLT = £3,750
This is a saving of £15,000 based on the Stamp Duty rates that were in place before 8 July 2020.
You can use the Government’s SDLT calculator to work out how much tax you’ll need to pay.
If you’re buying a second home, you’ll still pay SDLT on any property costing more than £40,000 – paying an extra three percent.
Simply add three percent to each of the rates shown in the above chart to calculate how much you will pay.
Usually your solicitor will deal with the SDLT return and any payment due, although you can do it yourself.
As the buyer, you are ultimately responsible for making sure it’s all submitted on time.
If the price of your new home is under £500,000 you must still submit a return (unless exempt) even though you won’t need to pay any SDLT.
There are other circumstances in which SDLT is not payable:
- Transfer of property in separation or divorce: If you’re divorcing or separating from your spouse or partner, there’s no SDLT to pay if you transfer a proportion of your home’s value to them.
- Transfer of deeds. If you transfer the deeds of your home to someone else – either as a gift or in your Will – they won’t have to pay SDLT on the market value of the property.