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Reduced property transaction charges

Recent research revealed that property transactions fell by more than 50% in May and house prices have fallen for first time in eight years. In an attempt to help boost the housing market, a temporary reduction in stamp duty land tax (SDLT) in England and Northern Ireland has been introduced. The Scottish and Welsh Governments have also announced corresponding reductions to Land and Buildings Transaction Tax (LBTT) and Land Transaction Tax (LTT).

SDLT

The nil rate band threshold for SDLT payments on residential property has been temporarily increased from £125,000 to £500,000. This change applies from 8 July 2020 until 31 March 2021.

Current rates are:

Portion of value
Rate %
Additional property rate %
£0 – £500,000
0
3
£500,001 – £925,000
5
8
£925,001 – 1,500,000
10
13
Over £1.5m
12
12

From 1 April 2021 the £500,000 threshold will revert to £125,000.

Treasury estimates suggest that the average homebuyer will see their SDLT bill fall by £4,500 as a result of this temporary measure, and nearly nine out of ten main home buyers will pay no duty at all.

LBTT

In Scotland, the LBTT nil threshold has been increased from £145,000 to £250,000 between 15 July 2020 and 31 March 2021.

Current rates are as follows:

Purchase price
LBTT rate
Up to £250,000
0%
Above £250,000 to £325,000
5%
Above £325,000 to £750,000
10%
Over £750,000
12%

The rates for the additional dwelling supplement (ADS) and non-residential LBTT remain unchanged.

The reduced charges mean that someone buying a house at the average Scottish house price of £179,541 would expect to save £690 in LBTT. Overall, it is estimated that an additional 34% of property transactions will be taken out of LBTT, taking the total to 79%.

LTT

The Welsh Revenue Authority (WRA) has also announced changes to LTT charges, which apply from 27 July 2020 onwards.

The new rates and threshold are as follows:

Price threshold
LTT rate
The portion up to and including £250,000
0%
The portion over £250,000 up to and including £400,000
5%
The portion over £400,000 up to and including £750,000
7.5%
The portion over £750,000 up to and including £1,500,000
10%
The portion over £1,500,000
12%

Higher residential tax rates for additional properties remain unchanged.

The Welsh Government estimates that around 80% of homebuyers in Wales will pay no tax when purchasing their home, and that buyers of residential property who would have paid the main rates of LTT before 27 July 2020 will save up to £2,450 in tax.

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