Further to the news today the Chancellor, Rishi Sunak has implemented an immediate cut in Stamp Duty Land Tax (SDLT) until 31 March 2021 by increasing the threshold to £500,000, it is ideal timing to provide a reminder of SDLT rates plus situations that give rise to potential refunds of the additional 3% rate (read to bottom).
The announcement today provided other details such as a £1,000 incentive to retain a staff member at the end of the furlough scheme along with other news to promote economic recovery.
A reminder of the rates currently:
|Property or lease premium or transfer value||SDLT rate|
|Up to £125,000||Zero|
|The next £125,000 (the portion from £125,001 to £250,000)||2%|
|The next £675,000 (the portion from £250,001 to £925,000)||5%|
|The next £575,000 (the portion from £925,001 to £1.5 million)||10%|
|The remaining amount (the portion above £1.5 million)||12%|
First time buyers can claim a discount (relief) so they do not pay any SDLT up to £300,000 and 5% on the portion from £300,001 to £500,000.
An additional higher rate on top of 3 per cent is applied to those purchasing a second property (this is also payable by companies).
Apart from the higher rate if companies buy properties valued over £500,000 there is a SDLT charge of 15 per cent plus possibly and annual tax charge (Annual Tax on Enveloped Dwellings – ATED)
- Use of companies to purchase residential property can be favourable as although additional SDLT still applies there is relief for mortgage interest (restricted for tax relief for an individual). Plus lower rate of corporation tax vs higher rates of income tax.
- The higher rate does not apply to commercial property
- You may lend money to family members (eg. children) to purchase a property
This information is correct as at 8 July 2020.