The Chancellor has confirmed a three-month extension to the stamp duty holiday until 30 June 2020.

In a widely trailed announcement, the Stamp Duty Land Tax “holiday” was extended at the zero rate band of £500,000 from 31 March to 30 June 2021. What was unexpected was a further extension until 30 September 2021 albeit at reduced zero rate band of £250,000 from 1 July to 30 September.

The extension means that all residential property transactions involving a main home completed on or before 30 June 2021 for a consideration up to £500,000 will not pay any SDLT.

Residential purchases involving a main home completed on or before 30 September 2021 for a consideration of up to £250,000 will not pay any SDLT. Normal rates of SDLT apply to the purchase price above the relevant thresholds and the £125,000 zero rate threshold will take effect from 1 October 2021.

The SDLT “holiday” also benefits the purchase of investment properties (such as holiday homes and property to rent) by individuals and the purchase of residential properties by companies. These transactions are subject to the 3% SDLT surcharge rate that applies to each band of SDLT. The extension of the holiday means that the £500,000 and £250,000 limits will be subject to the 3% SDLT surcharge rate.

SDLT up to 30 June 2021

Relevant consideration                                                    “Standard” property purchase        Additional rates residential property purchase

Not exceeding £500,000                                                                   0%                                                                    3%

Over £500,000 but does not exceed £925,000                            5%                                                                     8%

Over £925,000 but does not exceed £1,500,000                         10%                                                                  13%

Over £1,500,000                                                                                 12%                                                                  15%

SDLT up to 30 September 2021

Relevant consideration                                                    “Standard” property purchase        Additional rates residential property purchase

Not exceeding £250,000                                                                   0%                                                                    3%

Over £250,000 but does not exceed £925,000                            5%                                                                     8%

Over £925,000 but does not exceed £1,500,000                         10%                                                                  13%

Over £1,500,000                                                                                 12%                                                                  15%

The Scottish Government and the Welsh Government have both previously announced in their Budgets that the “holiday” or increase of the nil rate band for Scottish Land and Buildings Transaction Tax and Land Transaction Tax respectively will end on 31 March 2021 with no further extension.

We will have to wait and see if the Chancellor’s announcement today prompts a rethink by the respective Finance Ministers in Edinburgh and Cardiff.

On 21 December 2020, the Welsh Finance Minister announced, with effect from 22 December 2020, an increase in the surcharge for additional rates residential property purchases from 3% to 4% (in line with the surcharge in Scotland).

From the same date, the zero rate threshold for non-residential property purchases and the threshold for lease rental Net Present Value calculations was increased from £150,000 to £225,000.