The Chancellor, Rishi Sunak recognised the key part the housing sector would play in supporting the UK’s economic recovery and announced a temporary discount to England and Northern Ireland’s Stamp Duty Land Tax (SDLT) by increasing the tax threshold from £125k to £500k on a homebuyer’s main residence with immediate effect. This reduction means that people completing a home purchase during the SDLT discount period (between 8 July 2020 to 31 March 2021) won’t need to pay stamp duty on the first £500,000 of the purchase price, thereby giving homebuyers a significant discount on their house purchase costs with the average buyer benefiting from a £4,500 reduction in costs.

The temporary reduction in the SDLT tax, which will apply to both first time buyers (whose previous threshold was £300k) and those that have owned a property before, will come as a welcome relief for homebuyers in England and Northern Ireland as nearly nine out of ten people buying a main residence will pay no stamp duty at all while others buying properties above the £500k threshold will only pay SDLT on the purchase cost above £500 rather than above the previous threshold of £125k. For example, a person buying a house for £800,000 will save close to £15,000 on their purchase costs!

Table 1. Residential rates on purchases in England and N. Ireland from 8 July 2020 to 31 March 2021 (including First Time Buyers)

Table 1. Source gov.co.uk

STLT Rates for additional properties in England and N. Ireland

Property investors buying a second or further additional properties in England and Northern Ireland above £40,000 will also benefit from the changes paying just 3 per cent SDLT on purchases up to £500,000 until the discount period ends on 31 March 2021 (see table 2).

Table 2: Regional Breakdown of Property Purchases (All Buyers)

Table 2. Source gov.co.uk

The government says that companies and individuals buying residential property worth less than £500,000, will also benefit from these latest changes, as will companies that buy residential properties of any value where they meet the relief conditions from the corporate 15 per cent SDLT charge.