Is it worth much? Since December 2014 SDLT on residential properties has been calculated on a “slice” basis. This means that increasing rates are applied to the portion of the property value that falls within each band. Previously we had a “slab” system in place under which a single rate applied to the full purchase price.
There have been two major changes to SDLT which need to be borne in mind:
- From April 2016 a 3% surcharge was added for acquisitions of additional dwellings and acquisitions by companies.
- From November 2017, subject to certain conditions, first-time buyers pay 0% on the first £300,000 of purchase price and 5% on any excess up to £500,000. The concession does not apply to properties with a purchase price exceeding £500,000.
Before the break
The standard rates were:
IndividualSDLT rateHigher SDLT rateUp to £125,0000%3%£125,001 – £250,0002%5%£250,001 – £925,0005%8%£925,001 – £1,500,00010%13%£1,500,001 +12%15%
So when Alison bought her replacement flat for £450,000 in 2019 the SDLT payable would have been calculated as follows:
£125,000 @ 0%–£125,000 @ 2%2,500.00£200,000 @ 5%10,000.00£12,500.00
Had Alison deferred the purchase until the period 8 July 2020 to 31 March 2021 there would have been no SDLT charge at all!
During the break
The rates applying in the Break period are:
Relevant consideration sliceSDLT rateHigher SDLT rateUp to £500,0000%3%£500,001 – £925,0005%8%£925,001 – £1,500,00010%13%£1,500,001 +12%15%
The break therefore takes the form of increasing the 0% rate and 3% thresholds to £500,000.
And after the break?
The Government will revert to the former position unless there are compelling reasons to change it once again. However it is expected that an additional 2% surcharge will be introduced on top of the applicable rates for non-UK residents as announced in the Spring 2020 Budget.
Some economists predict that the housing market is bound to suffer from Covid-19 because furloughed employees will struggle to find mortgages. As a result house prices are expected to drop by March 2021. But like the US greenback UK house prices always come back. Here is an opportunity to buy a house for up to £500,000 with no SDLT payable.The advice is to get moving sooner rather than later. It would be a great shame to lose the relief on 31 March 2021 because someone in the chain defaulted at the last moment.
For more info, give us a call today on 01442 202650.