Stamp duty cut announced in Chancellor’s Summer Statement on 08 July 2020
Today the Chancellor of the Exchequer Rt Hon Rishi Sunak announced a temporary cut to stamp duty land tax (“SDLT”). Accordingly SDLT will no longer be charged on the first £500,000 on property purchases until 31 March 2021, effective immediately.
What is the difference in the standard SDLT rates?
| Tranche of property value | Pre-8 July 2020 basic rates | Basic rates between 8 July 2020 and 31 March 2021 |
| £0 – £125,000 | 0% | 0% |
| £125,001 – £250,000 | 2% | |
| £250,001 – £500,000 | 5% | |
| £500,001 – £925,000 | 5% | |
| £925,001 – £1.5m | 10% | 10% |
| Over £1.5m | 12% | 12% |
What saving may I make on basic rates of SDLT by buying between now and 31 March 2021?
Here are some examples of the difference in basic SDLT rates following the Summer Statement:
Example 1: property bought for £500,000 (or less) will pay £0 in SDLT.
Example 2: property bought for £600,000 will pay no SDLT on the first £500,000, and 5% on the remaining £100,000 – a charge of £5,000. Before the Summer Statement, the buyer would have paid £20,000.
Example 3: property bought for £1,000,000 would previously have paid £43,750, but will now pay £28,750, a saving of £15,000.
What is the position if I am paying the higher rate of SDLT?
When buying a second property or a buy-to-let property, an additional 3% rate of SDLT is charged on top of the basic rate.
Where the buyer’s main residence is being replaced, the additional 3% will be charged, but may be refunded on application to HMRC.
| Tranche of property value | Pre-8 July 2020 higher rates | Higher rates between 8 July 2020 and 31 March 2021 |
| £0 – £125,000 | 3% | 3% |
| £125,001 – £250,000 | 5% | |
| £250,001 – £500,000 | 8% | |
| £500,001 – £925,000 | 8% | |
| £925,001 – £1.5m | 13% | 13% |
| Over £1.5m | 15% | 15% |
What saving may I make on higher rate of SDLT by buying between now and 31 March 2021?
Here are some examples of the difference in higher SDLT rates following the Summer Statement:
Example 1: property bought for £500,000 or less will pay SDLT at 3%. If the price is £500,000 exactly, £15,000 would be charged in SDLT.
Example 2: property bought for £600,000 will pay 3% SDLT on the first £500,000 (£15,000), and 8% on the remaining £100,000 (£8,000) – a total charge of £23,000. Before the Summer Statement, the buyer would have paid £38,000.
Example 3: property bought for £1,000,000 would previously have paid £73,750, but will now pay £58,750, a saving of £15,000.
Other considerations
Buyers may also need to bear in mind the following:
- Foreign buyers should note that a new SDLT surcharge of 2% is expected to apply to their purchases from April 2021; and
- Land is taxed differently for properties in Wales and Scotland.
