The reduced Stamp Duty Land Tax (SDLT) rate, initially introduced on 8 July 2020, has given a significant boost to the property industry, including the construction sector. When it was announced in the 2021 Budget that the SDLT holiday would be extended further, the news would have been readily welcomed by both purchasers and sellers alike.

The Government outlined the fact that the SDLT nil band would remain at the extended level of £500,000 for the period to 30 June 2021. This suspension on tax on the first £500,000 of a property sale means a saving of up to £15,000 on a single house purchase.

To avoid the bottleneck of purchases to 30 June 2021, the nil rate band is to be phased down in stages. The standard amount of £125,000 returns on 1 October 2021, phased as follows:

  • £500,000 nil rate band to 30 June 2021;
  • £250,000 nil rate band between 1 July 2021 and 30 September 2021; and
  • £125,000 nil rate band from 1 October 2021.

While the £500,000 nil rate band is in place, the next price bracket (£500,001 to £925,000) will be taxed at 5%, with the £925,001 to £1.5m taxed at 10%.

The Government’s aim with this extended SDLT holiday is to not only give the property market a helping hand by encouraging sales, but also to “turn generation rent into generation buy”. To support this pledge further, Chancellor, Rishi Sunak announced a ‘mortgage guarantee’ to give potential purchasers without a large deposit access to affordable mortgages. The guarantee means that many high street lenders will now provide mortgages to homebuyers who can only afford a 5% deposit.

For landlords, the reduction in the nil band provides an extended window of opportunity for those looking to grow their portfolios. Although landlords and second-home buyers will still be required to pay the additional 3% of stamp duty charged under the original SDLT rules, the chance to utilise this tax cut does provide a longer timeframe to secure any prospective investments.

For those landlords that might be considering re-structuring their property business by putting their portfolio into a company, this extension also offers an additional SDLT saving. Multiple dwellings relief, combined with the SDLT holiday presents itself as an interesting proposition, where the potential £15,000 saving per property is multiplied by the number of properties to be transferred.

Considering incorporating you property business?  Please take a look at our “Incorporation of a Property Business” factsheet below and contact one of our experts on this topic.

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Our Team