Due to the Covid-19 pandemic, the housing market was largely affected and put on hold between 26th March 2020 and 13 May 2020, and following this period, there was continuous reduced activity in the UK housing marketing compared to the period before the lockdown was introduced.
So in reaction to this, the Chancellor announced ‘The Stamp Duty Land Tax Holiday’ back in July 2020, which puts into effect a temporary new nil rate band of £500,000, which has increased from the original £250,000, which for the time being bump ups the amount that a property buyer can pay for residential property before they are required to pay Stamp Duty Land Tax (SDLT).
This new holiday applies to residential properties purchased between 8th July 2020 to 30th June 2021. This has helped the Government’s strategy to maintain confidence in the housing market following the Covid-19 pandemic.
The temporary reduced rates which apply between the 8th July 2020 and 30th June 2021 are as follows:
| Property or lease premium or transfer value | SDLT rate |
| Up to £500,000 | Zero |
| The next £425,000 (the portion from £500,001 to £925,000) | 5% |
| The next £575,000 (the portion from £925,001 to £1.5 million) | 10% |
| The remaining amount (the portion above £1.5 million) | 12% |
However, as of the 1st July 2021, the threshold will change, meaning the cost of buying or transferring a property will be somewhat increased.
The new rates from 1st July to 30th September 2021 are as follows:
| Property or lease premium or transfer value | SDLT rate |
| Up to £250,000 | Zero |
| The next £675,000 (the portion from £250,001 to £925,000) | 5% |
| The next £575,000 (the portion from £925,001 to £1.5 million) | 10% |
| The remaining amount (the portion above £1.5 million) | 12% |
Following these new rates, homebuyers, property investors and landlords need to take these changes into consideration as they could have a significant impact on property values.
These changes will most likely humble the UK housing market, as the costs for most transactions will now increase. Landlords and investors will be mainly affected as they are already required to pay a 3% surcharge on each rate if more than one property is owned.
For more information, visit the UK Gov website here or get in touch with us at enquiries@aitaccountants.co.uk.
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