Following much speculation over the past few months, it has been announced in the 2021 Budget that the Stamp Duty Land Tax (SDLT) Holiday is to be extended to the end of June 2021.
Last year we reported on the announcement that the Chancellor Rishi Sunak announced a Stamp Duty Land Tax (SDLT) holiday for residential properties in England and Northern Ireland. The SDLT holiday applies to all residential purchases. The holiday is a relief on tax payable on the first £500,000 of the price paid for a residential property and this will continue to apply until 30 June 2021. Following this time, SDLT will be charged on purchase prices after the first £250,000 until 30 September 2021. The lowest band for residential SDLT liability will then return to £125,000 on 1 October 2021.
The SDLT holiday will mean that a buyer of property costing up to £500,000 will not be required to pay any SDLT, representing a saving of up to £15,000. For purchases of more than £500,000 SDLT will be payable on temporary bandings based on the purchase price. This calculation is based on the standard residential rates with no other relief applied and will temporarily replace the first-time buyers’ relief.
So far we have seen significant pressure on the conveyancing system and residential plot sales to reach completion by the previous deadline of 31st March. This announcement will relieve some of this pressure in the short-term and give others the opportunity to benefit from the holiday. Nationwide Building Society have calculated that the average price of a home rose by 0.7% since the introduction of the SDLT holiday. There is some anticipation that the rise in house prices may continue until the new deadline, leading to the market becoming subdued later in the year, but whether this occurs remains to be seen.