Immediate cut to Stamp Duty Land Tax
The Chancellor has announced an immediate cut to Stamp Duty Land (SDLT) Tax (8 July 2020) which has increased the 0% threshold for residential property from £125,000 and £300,00 for first time buyers to £500,000 in a move widely welcomed.
This means if you are currently buying your next residential property and it costs over £500,000, you will have automatically saved £15,000 in SDLT and £10,000 if you are a first-time buyer. If this move has tempted you to take a step onto the property ladder, you have to complete on the purchase before 31 March 2021. That date sounds a long way off, but sometimes due to complications and being in a chain it can take several months for a house purchase to go through, so it might be a good idea to start your search now.
The cut will benefit many first-time buyers as well as anyone buying a home worth more than £500k as SDLT is calculated in different bands. Now you will pay £0-500k - 0%, £500,001-£925k - 5%, £925,001-£1.5m - 10% and an additional 12% on properties worth over £1.5m.
You will still save money if you are buying a property that isn’t your main home but there is a 3% SDLT charge on properties up to £500k. The next £425k (£500,001 - £925,000) is charged at 8% and the next (£925,001 - £1.5m) is charged at 13%. The remaining amount above £1.5m is charged at 15%.
Alan Williams at Gullands comments: “This will certainly be a welcome move for many first-time buyers looking to get onto the property ladder as well as families who might be considering trading up for a larger home. Being at home during the lockdown has probably made a number of people question their current living arrangements and whether they want a larger garden, more rural living or being closer to family and friends. Now is a great time to consider such a move with significant tax savings available”.