By Kamran Shah, Associate, Penman Sedgwick LLP
The Chancellor announced in his recent budget an extension to the temporary stamp duty land tax relief (originally introduced in July 2020) until 30th June 2021. Thereafter it will be tapered until 30th September 2021.
This is good news for home owners looking to move up the property ladder and first time buyers. The danger of a cliff-edge moment on 31st March 2021 (when the relief was due to end) has been removed and the fear of waste costs on abortive transactions will not now materialise.
The extended tax relief means that no tax will be levied on the first £500,000 of property purchases in England and Northern Ireland with an effective date prior to 1st July 2021.
On 1st October 2021, ordinary rates* of stamp duty land tax in England and Northern Ireland will return to pre Covid-19 levels as follows:
• Purchases up to £125,000 – no tax applies
• The part of the purchase price between £125,001 and £250,000 – tax charged at 2%
• The part of the purchase price between £250,001 and £925,000 – tax charged at 5%
• The part of the purchase price between £925,001 and £1.5M – tax charged at 10%
• Above £1.5M – tax charged at 12%
* higher rates and surcharges apply to certain purchases
First time buyers’ relief will continue to apply (subject to conditions): no tax is payable on properties costing up to £300,000 and 5% tax applies on the remainder (up to £500,000).
There is also some talk in the media of stamp duty (and council tax) being scrapped and a new property levy being introduced to try and resolve some of the issues in the housing market but this could ultimately create as many issues as it tries to resolve whilst the Government tries to come up with a fairer system for all.