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Category: Rental Properties

New lower temporary SDLT threshold

New lower temporary SDLT threshold

The residential stamp duty land tax (SDLT) threshold applying in England and Northern Ireland was temporarily increased to £500,000 from 8 July 2020 to 30 June 2021 (extended from the original end date of 31 March 2021). From 1 July 2021 to 30 September 2021, a new temporary residential threshold of £250,000 applies. The threshold reverts to its usual level of £125,000 from 1 October 2021. Details of the rates can be found on the Gov.uk website.

Nature of the temporary threshold

To help boost house sales during the COVID-19 pandemic, the SDLT residential threshold was temporarily increased. Similar measures were introduced in Scotland in relation to land transaction tax (LTT) and in Wales in relation to land and buildings transaction tax (LBTT).

SDLT: 8 July 2020 to 30 June 2021

A higher temporary residential SDLT threshold of £500,000 applied in England and Northern Ireland where completion took place between 8 July 2020 and 30 June 2021. The usual rates applied to any consideration in excess of £500,000.

SDLT: 1 July 2021 to 30 September 2021

From 1 July 2021, the SDLT residential threshold drops to a new temporary level of £250,000. If you are in the process of buying a house and missed the 30 June 2021 completion deadline, you will be able to save SDLT of up to £2,500 if you complete by 30 September 2021.

The residential rates applying during this period are as set out in the table below.

ConsiderationOnly or main homeSecond and subsequent properties
Up to £250,0000%3%
The next £675,000 (£250,001 to £925,000)5%8%
The next £575,000 (£925,001 to £1.5 million)10%13%
Remaining amount12%15%

First-time buyers

From 1 July 2021, the threshold for first-time buyers reverts to £300,000 where the consideration is £500,000. First-time buyers pay no SDLT on the first £300,000 and pay SDLT at the rate of 5% on any consideration in excess of £300,000 up to £500,000. If the consideration is more than £500,000, the above rates and residential threshold apply.

SDLT: From 1 October 2021

The residential SDLT threshold reverts to its usual level of £125,000 from 1 October 2021. Purchasers will pay SDLT at a rate of 2% on the portion from £125,000 to £250,000. Above £250,000, the rates are as in the table above.

Second and subsequent properties

Investors and second-home owners also benefit from the temporary residential thresholds as the 3% supplement is added to the residential rates as reduced.

Scotland

The LTT threshold in Scotland was increased to £250,000 from 15 July 2020 until 31 March 2021. However, this period was not extended, and the threshold reverted to £145,000 from 1 April 2021. As in England and Northern Ireland, those buying second and subsequent properties benefited from the higher threshold; the 4% supplement was applied to the reduced residential rates.

Wales

The LBTT threshold in Wales was increased to £250,000 from 27 July 2020 to 30 June 2021, reverting to £180,000 from 1 July 2021. Unlike the rest of the UK, purchasers of second and subsequent properties in Wales did not benefit from the higher threshold.

Speak to us

If you are thinking of moving home or buying a holiday or investment property, speak to us to find out whether you can save SDLT.

August 2, 2021

Higher residential SDLT threshold extended

Higher residential SDLT threshold extended

Stamp duty land tax (SDLT) is payable when you buy a property in England or Northern Ireland. Last year, the SDLT residential threshold was temporarily increased to £500,000 with effect from 8 July 2020. The threshold was due to revert to its normal level of £125,000 from 1 April 2021, but this has now been delayed.

The residential threshold applying in Scotland for Land and Buildings Transaction Tax (LBTT) was also increased for a temporary period, but reverted to its normal level of £145,000 from 1 April 2021. In Wales, the residential Land Transaction Tax (LTT) threshold was increased to £250,000 from 27 July 2020. It will remain at this level until 30 June 2021, reverting to its usual level of £180,000 from 1 July 2021.

SDLT residential threshold – 8 July 2020 to 30 June 2021

The SDLT residential threshold will remain at £500,000 until 30 June 2021. The rates applying until that date are set out below.

Property valueMain homeAdditional properties
Up to £500,000Zero3%
Next £425,000 (£500,001 to £925,000)5%8%
Next £575,000 (£925,001 to £1.5 million)10%13%
The remaining amount (over £1.5 million)12%15%

SDLT residential threshold – 1 July 2020 to 30 September 2021

From 1 July 2021 until 30 September 2021, a lower temporary residential SDLT threshold of £250,000 will apply. The first-time buyer threshold (which applies where the consideration does not exceed £500,000) reverts to £300,000 from 1 July 2021.

The SDLT rates applying for this period are set out below.

Property valueMain homeAdditional properties
Up to £250,000Zero3%
Next £675,000 (£250,001 to £925,000)5%8%
Next £575,000 (£925,001 to £1.5 million)10%13%
The remaining amount (over £1.5 million)12%15%

SDLT residential threshold from 1 October 2021

The SDLT residential threshold returns to £125,000 from 1 October 2021. The residential rates applying from that date are set out below.

Property valueMain homeAdditional properties
Up to £125,000Zero3%
The next £125,000 (£125,001 to £250,000)2%5%
Next £675,000 (£500,001 to £925,000)5%8%
Next £575,000 (£925,001 to £1.5 million)10%13%
The remaining amount (over £1.5 million)12%15%

Contact us

If you are looking to buy a property this year, speak to us to find out what you can save by completing the sale by 30 June 2021 or, if this is not possible, by 30 September 2021. Remember, if you are looking to buy an investment property, you will also benefit from the higher thresholds as the 3% supplement is added to the residential rates, as reduced.

May 31, 2021

Furnished holiday lettings and lockdowns

Furnished holiday lettings and lockdowns

The second National Lockdown and local restrictions may mean that you are unable to meet the tests for your holiday let to qualify as a furnished holiday letting (FHL) for 2020/21. However, where this is the case, all is not lost as there are alternative routes by which your let might meet the FHL requirements.

FHL tests

To qualify for the more advantageous FHL tax regime, your property must be let commercially, let furnished, and it must be in the UK or the EEA. It must also meet all of the following occupancy conditions.

  1. The pattern of occupancy condition – the total of all lettings that exceed 31 continuous days in the tax year cannot be more than 155 days.
  2. The availability condition – your property must be available for letting as furnished accommodation for at least 210 days in the tax year. Days that you stay in the property do not count.
  3. The letting condition – your property must be let commercially as furnished holiday accommodation for at least 105 days in the tax year (excluding lets of more than 31 days and days occupied cheaply or free by family and friends).

If you have failed to meet the letting condition in 2020/21 due to the impact of the COVID-19 pandemic, you may be able to make an averaging and/or a period of grace election to help you reach the magic number. HMRC Helpsheet HS253 contains further details.

Averaging election

If you have more than one property that you let out as furnished holiday accommodation, you may be able to use an averaging election to help all your properties to qualify. This will be the case if some but not all of the lets meet the letting condition. An averaging election allows the condition to be met by reference to the average occupancy across all your holiday lets. For example, if you have three holiday lets and the total number of days in the tax year on which the properties are let as furnished holiday accommodation is at least 315 days, all 3 properties will meet the requirement. The average let will be at least 105 days.

An averaging election for 2020/21 must be made by 31 January 2023.

Period of grace election

A period of grace election can be made as well as, or instead of, an averaging election. It will help if you genuinely intended to meet the letting conditions, but were unable to do so, for example, because of the impact of the COVID-19 pandemic.

To qualify, the property must have met the letting requirement for the year before the year for which you first wish to make a period of grace election; so, if the first year for which an election is required is 2020/21, the letting condition must have been met (individually or as a result of an averaging election) in 2019/20. A second election can be made for 2021/22 if the condition is not met again in that year. However, your property must meet the requirement in 2022/23 if it is to continue to qualify as a FHL.

As with an averaging election, a period of grace election for 2020/21 must be made by 31 January 2023.

Talk to us

Contact us to discuss how you can ensure that your holiday let qualifies for the favourable FHL tax regime.

December 16, 2020