The Stamp Duty holiday deadline: what you need to know
Stuart Garlick, senior area manager for Wesleyan Financial Services, shares insights into the tax break changes in the coming weeks and months.
Depending on which area of the UK you’re from, under certain conditions you will have access to some form of tax break if buying residential property during the pandemic.
Known as the Stamp Duty holiday in England and Northern Ireland, Land Transaction Tax (LTT) holiday in Wales and Land and Buildings Transaction Tax (LBTT) holiday in Scotland, each form of this tax break has different deadlines and tapering of benefits.
I’ve outlined the key questions you may have and the key dates you need to know if you’re in the process of buying property for when this benefit comes to an end.
When is the deadline for the Stamp Duty holiday?
This depends on which part of the UK you are looking to buy property.
In Scotland the LBTT holiday wasn’t extended in March’s Budget announcement. So the tax break in Scotland ended 31 March 2021. In Wales, there is a hard stop on the LTT holiday on 30 June.
Despite common belief, the Stamp Duty holiday in England and Northern Ireland isn’t coming to an end completely like Wales at the end of the month.
In the March Budget, the Chancellor extended the Stamp Duty holiday in England and Northern Ireland to 30 June. After which the nil rate threshold drops from £500,000 to £250,000 until 30 September 2021.
Rishi Sunak says the additional step down of the nil rate threshold, before it is lowered to its normal level of £125,000, was to ‘smooth the transition’.
What are the key dates for England and Northern Ireland for the tapering of benefits?
If you are in the process of buying property without Stamp Duty implications, the key dates are 30 June and 30 September 2021.
The following shows the changes to the Stamp Duty holiday and the value of properties that it will affect:
- Until 30 June 2021, nil rate band is £500,000
- Until 30 Sept 2021, nil rate band is £250,000 (£300,000 for first time buyers)
- From 1 October, nil rate band is £125,000 (£300,000 for first time buyers).
How will this affect a house that is nearing completion?
Buyers need to complete by the deadline in order to take advantage of the Stamp Duty holiday.
It is likely that conveyancers, lenders and other steps in the house buying process will be very busy. It’s worth considering what you would do if you had to pay the normal rate of stamp duty.
Can you begin the process on buying a home before the June deadline now?
It’s very unlikely you’d complete on a property through the usual process via an estate agent. Particularly if you form part of a chain. This is due to the administrative requirements and booming market, which has extended the usual timeframe for this process.
One of the more likely ways to buy a property within a shorter timeframe is to purchase a home at auction. But even then, it is unlikely you will complete before the June deadline.
Does this affect dental practice purchases/buy-to-let properties?
The Stamp Duty holiday is only available on residential properties. Higher rates of Stamp Duty still apply on purchases of additional properties.
There are different rules for a corporate body purchasing residential property. You can use HMRC’s stamp duty calculator to work out how much tax you’ll pay: www.tax.service.gov.uk/calculate-stamp-duty-land-tax.
Tax treatment depends on the individual circumstances of each client and is subject to change in future.
Advice is provided by Wesleyan Financial Services Ltd.
‘Wesleyan’ is a trading name of the Wesleyan Group of companies.