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Insights // 03 March 2021

Stamp Duty “Holiday” Extended in Spring Budget

Partner Luke McMath, in our Residential Property team, explains the impact of the  Stamp Duty "holiday" extension, announced in the spring budget.

Stamp Duty holiday extended

In his spring budget on 3 March 2021, Chancellor Rishi Sunak confirmed that the Stamp Duty “holiday”, introduced on 8 July last year, will be extended until 30 June 2021. It had been set to end on 31 March 2021. He also announced that from 1 July to 30 September 2021, the holiday would continue in part with the SDLT threshold moving to £250,000 and providing a saving of up to £2,500 during that period.

Average house prices in the UK rose by 0.7% in February, according to Nationwide, and annual house price growth reached 6.9%.

The next quarter promises to be a very busy one for buyers and sellers, estate agents, lenders and solicitors, as all those involved look to complete transactions in advance of the 30 June “deadline”.

The Chancellor also announced a new government-backed mortgage guarantee scheme, which will see 95% mortgages (for buyers with a 5% deposit) guaranteed by the government. Mr Sunak confirmed that lenders including Lloyds, NatWest, Santander, Barclays and HSBC will be supporting the scheme, with Virgin Money also set to follow.

The normal situation

In England, Stamp Duty Land Tax (SDLT) is normally paid on bought land or property valued at £125,000 or more.

Stamp Duty rates are normally charged on a ‘sliced’ basis, meaning that the rate increases for higher value properties as follows and that multiple rates may be applicable for different proportions of a property’s value:

Portion of a property’s value

SDLT rate that applies to this portion

£125,001-£250,000

2%

£250,001-£925,000

5%

£925,001-£1.5 million

10%

-£1.5 million +

12%

The Stamp Duty holiday means that until 30 June 2021, anyone purchasing a main property valued at under £500,000 (including first time buyers, who have been exempt on paying SDLT up to £300,000 and have paid 5% on any portion between £300,000 and £500,000) will pay no SDLT. Buyers of higher value properties will pay a reduced amount of SDLT, saving £15,000.

A small saving would still apply until 30 September 2021.

How much can a buyer save?

The table below sets out the potential SDLT savings that buyers completing 30 June 2021 stand to make as a result of the newly introduced Stamp Duty holiday.

Property purchase price

Normal Stamp Duty (SDLT) charge

Stamp Duty (SDLT) charge between 8 July 2020 and 31 March 2021

Under £125,000

-

-

£250,000

£2,500.00

-

£350,000

£7,500

-

£450,000

£12,500

-

£500,000

£15,000

-

£600,000

£20,000

£5,000

£750,000

£27,500

£12,500

£1 million

£43,750

£28,750

£2 million

£153,750

£138,750

For further information or legal advice, please contact law@blandy.co.uk or call 0118 951 6800. 

This article is intended for the use of clients and other interested parties. The information contained in it is believed to be correct at the date of publication, but it is necessarily of a brief and general nature and should not be relied upon as a substitute for specific professional advice.

Luke McMath

Luke McMath

Partner

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