Among the many measures announced in response to the Covid-19 pandemic are welcome reductions in the amount of "stamp" taxes payable on residential property purchases.
Perhaps unsurprisingly, many estate agents are already reporting a significant increase in enquiries from property investors looking to take advantage of the temporary reductions.
For transactions with an "effective date" from 15 July 2020 until 31 March 2021, the Land & Buildings Transaction Tax (LBTT) rate on residential property purchases above £145k has been reduced. Buyers will pay 0% (previously 2%) on the part of the price falling between £145k and £250k, saving up to £2,100. The "effective date" is the date of settlement or entry.
The 4% Additional Dwelling Supplement will still apply to second home purchases and purchases through companies.
England and Northern Ireland
For transactions between 8 July 2020 and 31 March 2021, the 0% band has increased from £125k to £500k. Buyers of residential property will pay 0% on the part of the price falling below £500k, saving up to £15,000 in Stamp Duty Land Tax (SDLT).
The 3% surcharge for second home owners and companies will continue to apply.
In Wales, the 0% band has increased from £180k to £250k on purchases between 27 July 2020 and 31 March 2021, saving buyers up to £2,450 in Land Transaction Tax (LTT).
Again the 3% surcharge will continue to apply to relevant transactions.
It's worth reflecting that, as late as 2011, the maximum rate of SDLT was 4%; now it can be as much as 16% in Scotland, 15% in England, Wales and Northern Ireland. Admittedly, the 4% was applied to the entire purchase price, whereas we now have a system of "bands" - but the tax increase on high value transactions has been enormous nonethless.
If you have any questions about this article, or if you require advice about the tax implications of a property transaction, contact us today.