SDLT – The Holiday Is Over

Legal Rights of Separating Cohabitees

As you will be aware the Stamp Duty Land Tax holiday is due to end in part on 30 June 2021.

The current holiday means that the threshold for SDLT has been raised to £500,000.  This means that the first £500,000 is taxed at 0%.  This is a saving of £15,000 on the pre-holiday rates.

Between 1 July 2021 and 30 September 2021, the SDLT threshold will be £250,000.  This will be a £2,500 saving on the pre-holiday rates.

From 1 October 2021 the rates will return to the pre-holiday rates.

We have shown some examples of the effect this will have on the SDLT payable as follows:-

Example 1

Purchase of a residential property (not a second property) at £350,000 on 30 June 2021.  SDLT payable £0

Example 2

Purchase of a residential property (not a second property) at £350,000 on 1 July 2021. SDLT payable £5,000

Example 3

Purchase of a residential property (not a second Property) at £350,000 on 1 October 2021. SDLT payable £7,500

First-time buyers

From 1 July 2021, you’ll get a discount (relief) that means you’ll pay less or no tax if both the following apply:

The tax threshold is £300,000 outside of London. What classifies as London is confirmed on the Government’s website.

Example 4

You are a first time buyer purchasing a residential property for £350,000 on 1 July 2021.  SDLT payable £2,500

Whilst there is a big saving to be made on completion by 30 June this is not going to be achievable in all cases.  We cannot make any guarantees as to the speed of ANY transaction as this is BEYOND OUR CONTROL. FOR EXAMPLE, you cannot obtain removers or mortgage funds cannot be released in time by your lender.

You need to be aware that all parties in your chain will need to be able and willing to move. You should also take into account that COVID restrictions may still affect other companies’ working patterns and people may now return to remote working and closing their offices to visitors. Please also bear in mind, that COVID restrictions may have an effect on other parties involved in your transaction, such as local authorities (for searches), surveyors, valuers, mortgage companies, estate agents, banks etc., which are all beyond our control.

In particular you should be aware:-

Please do note that some mortgage offers are conditional upon the matter completing on or before 30 June 2021. You will need to ensure you are aware of all conditions attached to your mortgage offer and ensure these are met.

Please do also be aware that the standard conditions of sale build in an allowance for delay of completion before you (IF YOU ARE READY WILLING AND ABLE TO COMPLETE) are entitled to rescind the contract.  This may mean that if you agree to a completion date at the end of June and completion falls over into July you will be liable to pay the increased rates of SDLT. So you must budget for the additional SDLT payable. Whilst you may be able to claim this back from the defaulting party you will need to pay it in the first instance and you should be aware of this. If you are the defaulting party you should be aware that you may be liable to pay back a considerable amount of tax to the rest of the chain that has been incurred because of your default.

Get in touch

In view of the fact all of your circumstances are different, it is always important to seek advice from an experienced law specialist to discuss your circumstances and consider the different options available to you.

If you wish to speak to any of the property law team about Stamp Duty Land Tax Deadline, or anything related to this, then please get in touch. Either call on 01323 841481 to arrange an appointment  or please fill in the form below and someone will get in touch.

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Please note that this article does not constitute legal advice. You should always speak to a legal professional to discuss your circumstances and consider your options.