insideKENT Magazine Issue 100 - August 2020 | Page 94

FINANCE Homebuyers, SDLT Holiday Until Spring 2021 By Rick Schofield, Partner, Wilkins Kennedy THE CHANCELLOR ANNOUNCED ON 8 JULY 2021 AN IMMEDIATE INCREASE IN THE NIL RATE BAND OF STAMP DUTY LAND TAX TO £500,000. THIS WILL BE VERY WELCOME NEWS TO HOMEBUYERS AS OVER 80% OF HOME PURCHASES WILL NOT NEED TO PAY ANY SDLT IF PURCHASED BEFORE 31 MARCH 2021. FOR A HOME PURCHASED FOR £500,000, THE SDLT SAVING IS WORTH £15,000, AND FOR THE AVERAGE HOUSE PURCHASE IN ENGLAND OF £247,000, HOMEBUYERS WOULD SAVE £2,440. However, the 3% surcharge applicable to the purchase of second homes, by individuals and all purchases by businesses, will continue. The 15% flat super rate for purchases by corporates is unchanged where the purchase price is over £500,000. The rates for SDLT on a residential purchase are now: Property Value £ 0-500,000 500,001 – 925,000 925,001 - 1,500,000 Normal rate 0 5% 10% 3% surcharge for additional rate 3% 8% 13% March 2021. This may mean early payment of the SDLT but would secure the reduction currently available. Multiple Dwellings Relief The SDLT holiday also applies to purchases where a claim for Multiple Dwellings Relief is being made. However, care needs to be taken to see if a claim is still the right route as the minimum 1% SDLT charge still applies if Multiple Dwellings Relief is claimed. Mixed Use property HMRC have been taking a keen interest in claims for ‘mixed use’ property (say a country house with only a modest area of field attached) as the SDLT payable with a claim for mixed use was often less than at the residential rates, particularly for purchases liable to the 3% surcharge. The benefits of securing mixed use may not be worthwhile if the purchase price is less than £1,215,000. 1,500,001 + What the changes mean – some scenarios 12% If you completed your house purchase on 7 July, can you claim a reduction in the SDLT payable? Unfortunately, not. The new rules only apply to purchases completing on or after 8 July 2020 until 31 March 2021. If you exchanged contracts on 7 July but are not completing until 1 November 2020, can you benefit? 15% Yes, you will be able to benefit from the reduction, as SDLT is triggered by substantial performance of a contract, which is usually taking possession of a property. If you are exchanging contracts for a new build purchase on 10 July 2020 but will not complete until 1 June 2021, will you benefit from the reduction in SDLT? No, as the purchase is not completing by 31 March 2021. What can be looked at is to trigger substantial performance of the purchase by 31 Contact Us For more information regarding the proposed SDLT and other changes announced by the Chancellor in his Summer Statement, please contact us: [email protected] Local offices: Ashford: 01233 629 255 / Canterbury: 01227 454 861 Maidstone: 01622 690 666 / Orpington: 01689 827 505 Sandwich: 01304 249 997 [email protected] www.wilkinskennedy.com wilkinskennedy 94