Tax Briefing | July 2020

Temporary SDLT cut

The Chancellor has announced a temporary increase in the “nil rate band” for (SDLT), effective immediately.

SDLT is payable in bands, with yy We would hope and expect that residence may well still have a different rates applying to residential this reduction in rates will apply minimum SDLT rate of 3%. The and non-residential property. Prior to property sales which complete HRAD does not appear to have to today’s announcement the first after midnight last night, ie been reduced or restricted in any £125,000 of the purchase price of property sales which have already way. any residential property was exempt exchanged under the old higher yy In addition to the above nil rate from charge, and the Chancellor has rates will not be excluded from band increase, there has been a announced that this will be increased the reduction in rates. We will similar increase to the nil rate band to £500,000 for properties purchased also need to examine the rules for for SDLT on the rental element between 8 July 2020 and 31 March 31 March 2021 to see whether of leased property. This applies 2021. The new rates are shown in the properties which exchange prior only rarely in our experience, but table below. to 31 March 2021 will “lock in” nevertheless is worth bearing in the reduced rates even if they mind for new leases or extensions An illustration of what this means in complete afterwards – this will be within the next nine months. practice is also at the bottom of this particularly important for overseas briefing. clients given the promised 2% surcharge on overseas buyers LBTT in We are yet to see detailed legislation, from 1 April 2021. Following the increase in the SDLT but we have a few thoughts at this yy Please note that the 3% Higher nil rate band threshold in stage: Rate for Additional Dwellings (the and , the Scottish “HRAD”) applies on top of the Government has announced a similar rates listed above. So a buyer who measure to stimulate the housing already owns another dwelling market in Scotland. The Scottish nil and is not replacing their main rate band will increase to £250,000

New SDLT rates Old rate New rate

£0 - £125,000 0% 0% £125,001 - £250,000 2% 0% £250,001 - £500,000 5% 0%

£500,001 - £925,000 5% 5%

£925,001 - £1,500,000 10% 10%

Above £1,500,000 12% 12%

New SDLT rates illustration Purchase price Old SDLT New SDLT

£100,000 £0 £0 £250,000 £2,500 £0 £600,000 £20,000 £5,000

£1,000,000 £43,750 £28,750

There is a maximum saving of £15,000 per property. from £145,000, though a date when The limit was previously £180,000, this will take effect has not yet been and it will be raised to £250,000 for announced. transactions taking place between 27 July 2020 and 31 March 2021. The change means that no LBTT will be payable up to £250,000, and for a While this move is welcome, there new build four bedroom home costing are now three different and diverging £500,000 LBTT will be reduced from regimes of land transfer tax in the £23,350 to an expected £21,250. UK and it is more and more difficult for conveyancers in one jurisdiction Housebuilders and developers will to keep up with small but significant welcome the change, with the average disparities in the rules. For example, price of a new build home in Scotland the new Welsh rates will not apply to being around £225,000. second homes and rental properties, whereas in England and Northern Land Transaction Tax in Ireland part (but not all) of the benefit of the increased nil rate band will Following the example of England, apply to such properties. Northern Ireland and Scotland, the has announced For advice on the new SDLT rates, please that the threshold under which no speak to your usual Saffery Champness Land Transaction Tax (the Welsh partner, or contact Adam Kay, equivalent of Stamp Duty Land Tax) E: [email protected]. is due will be raised on a temporary basis.

E: [email protected] www.saffery.com

Saffery Champness’ Tax Briefing is published on a general basis for information only and no liability is accepted for errors of fact or opinion it may contain. Professional advice should always be obtained before applying the information to particular circumstances. J8489. © Saffery Champness LLP July 2020.

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