The temporary increase to the nil rate band for Stamp Duty Land Tax (SDLT), which was designed to boost the property market for those whose finances were affected by COVID-19, will be returning to the standard amount of £125,000 on 1 October 2021. This means that buyers will have to pay stamp duty again for purchases above £250,000.
This government tax break, when first introduced, had enabled people to save up to £15,000 when buying a home. Although these big savings are no longer available there is still the opportunity to benefit from a smaller tax break over the next month of up to £2,500.
Based on the current rules, if you purchase a residential property before 30 September 2021, you only start to pay SDLT on the amount you pay for the property over £250,000. The next £675,000 of property value is then charged to SDLT at the rate of 5%.
Please refer to the table below for temporarily reduced rates until 30 Sept:
Landlords and second-home buyers were also able to make sure of the tax cut, but they still had to pay the additional 3% on top of the temporarily reduced rates in the same way it is usually applied to the standard rates of SDLT.
Please refer to the table below for the higher rates until 30 Sept:
It is important to remember that the rate at which you pay your SDLT depends on the date that you complete your property purchase and not the date that you exchange contracts.
First-time buyers can still benefit from the £300,000 threshold which was first introduced in 2017. As a result of the thresholds above being lowered, first-time buyers will now not benefit from this scheme as their threshold of £300,000 is greater than the temporarily reduced rates.