The Chancellor announced on 8 July 2021 an immediate increase in the nil rate band of Stamp Duty Land Tax to £500,000. This will be very welcome news to homebuyers as over 80% of home purchases will not need to pay any SDLT if purchased before 31 March 2021. For a home purchased for £500,000, the SDLT saving is worth £15,000, and for the average house purchase in England of £247,000 a saving of £2,440.
However, the 3% surcharge applicable to the purchase of second homes by individuals and all purchases by businesses will continue. The 15% flat super rate for purchases by corporates is unchanged where the purchase price is over £500,000.
The rates for SDLT on a residential purchase are now:
What if I completed my house purchase on 7 July, can I claim a reduction in the SDLT payable?
I exchanged contracts on 7 July but I am not completing until 1 November 2020
I am exchanging contracts for a new build purchase on 10 July 2020 but will not complete until 1 June 2021, will I benefit from the reduction in SDLT?
Main residence purchase on 7 July 2020 for £400,000 would have incurred SDLT of £10,000. Purchasing the same house during the SDLT holiday would mean no SDLT payable, a saving of £10,000.
A holiday home purchase which is liable to the 3% surcharge would have incurred SDLT of £22,000 if purchased on 7 July 2020, but during the SDLT holiday this reduces to £12,000, again a saving of £10,000.
The SDLT holiday also applies to purchases where a claim for Multiple Dwellings Relief is being made. However care needs to be taken to see if a claim is still the right route as minimum 1% SDLT charge still applies if Multiple Dwellings Relief is claimed.
HMRC’s have been taking a keen interest in claims for ‘mixed use’ property (say a country house with only a modest area of field attached) as the SDLT payable with a claim for mixed use was often less than at the residential rates, particularly for purchases liable to the 3% surcharge. The benefits of securing mixed use may not be worthwhile if the purchase price is less than £1,215,000.
For Wales stamp duty land tax was replaced by Land Transaction Tax (LTT) when certain tax raising powers were devolved in 2018. The current rates of LTT that apply in Wales are:
At the moment, in Wales a homebuyer will pay LTT of £17,450 on a house with a value of £500,000 compared to zero stamp duty land tax in England.
People buying their main home in Wales costing less than £250,000 will not pay any tax under this temporary measure for property purchased between 27 July 2020 and 31 March 2021.
In Scotland, Land and Buildings Transaction Tax (LBTT) will be temporarily no longer payable on residential property valued at below £250,000, although it has not yet been announced on what date this will be introduced, which may cause some completions to stall in the short-term. The change only applies to purchases of main residences, not to any transaction where Additional Dwelling Supplement would apply (i.e. buy-to-lets, second homes, or purchases by limited companies or partnerships). The LBTT payable on transactions valued at £250,000 and above which qualify for the relief will be reduced by £2,100, with a smaller reduction for transactions between £145,000 and £250,000. Detailed legislation is yet to be made available to fully assess the nature of the changes, but the press release implies this will be the effect.
However, LBTT will now be £21,250 on a £500,000 transaction in Scotland compared to nil in England and Wales. The lower amount at which the tax continues to be raised in Scotland to some extent reflects lower property prices generally in Scotland compared to the South of England in particular.
For more information regarding how the proposed SDLT and other changes announced by the Chancellor in his Summer Statement may affect you and your business, please speak with your usual Wilkins Kennedy contact. Please also refer to our update review of the Summer Economic Statement July 2020 for further information.
Further COVID-19 related information can be found on our insights page which is regularly updated with the latest news, insight and details of the economic support and measures as they are announced by our Government.
As announced by the Chancellor on 29 May, the Self-Employed Income Support Scheme (SEISS) would be extended with a second tranche of money available from August for those businesses who have been ‘adversely affected’ by the COVID-19 pandemic on or after 14 July 2020.
Many business owners who were considering an exit may have been reviewing their plans after the Chancellor's changes to the Entrepreneur’s Relief in March, even before COVID-19 provided a further complication. The current situation tells us there is no certainty for businesses and business owners should consider their personal and professional positions, together with their aspirations, and review all options when considering their exit and succession planning.
As the country is easing out of social and economic lockdown measures, and more businesses are opening back up, businesses in certain sectors have been asked to collect data from their customers to support the Test and Trace programme. This can be seen as a daunting prospect for small organisations who are not familiar with the data protection laws. In this insight, we provide practical information for those business wanting to support the newly introduced Test and Trace programme.
HMRC have this week released initial guidance on eligibility for the UK Government’s new “Job Retention Bonus” and the process to claim. The scheme provides employers with payment of £1,000 for each furloughed employee who is retained following the cessation of the Government’s Coronavirus Job Retention Scheme (“CJRS”) on 31st October 2020. Further detailed guidance is expected to be released by the end of September 2020.
Many businesses are now planning for a return to work as the UK Government further lifts restrictions on the movement of people and the re-opening of businesses, with a phased return to “normality”. What will the new normal look like, especially for those involved in providing Professional Services?
Outlined in this insight are details of the support available for the dental sector during COVID-19 and an update on the extensions, where applicable, of the schemes available.
Subject to Royal Assent, Finance Bill 2019-20 is expected to introduce significant changes for some trusts holding non-UK situs property which was settled by a non-UK domiciled settlor.