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SDLT “Holiday” announced by Chancellor Rishi Sunak

Posted on 08th July 2020 in Affordable Housing

Posted by

Stephen Burtchaell

Partner and Solicitor
SDLT “Holiday” announced by Chancellor Rishi Sunak

On 8 July 2020 Chanceller Rishi Sunak announced a temporary increase in the Stamp Duty Land Tax (SDLT) threshold for residential property applicable to property transactions.

The increase was of the nil rate band from £125,000 to £500,000 effective from 8 July 2020 to 31 March 2021. The effect is that purchases of residential property for consideration up to £500,000 will pay no SDLT and anything above that figure will only pay SDLT on the amount of consideration above it at the applicable rate.

SDLT is payable on the consideration paid for land and the effective date for SDLT purposes is when the land contract is substantially performed. This is typically the completion date. For those purchasers who have exchanged contracts only recently with a completion date on or after 8 July, they will have a welcome surprise of reduced or no SDLT to pay. For those who have only just completed their purchases, they may feel slightly aggrieved. Likewise at the other end of the timescale, purchasers will be encouraged to ensure their transactions are substantially completed by the 31 March 2021 deadline if they are to make a saving.


The guidance states that

  • While the increased threshold subsists, first-time buyers' relief will not apply as transactions that would attract this relief will be covered by the extended nil-rate band (see Practice note, SDLT and residential property: First-time buyer's relief on acquisitions not exceeding £500,000).
  • The SDLT 0% rate for residential leases will, during the same period, apply to net present values up to £500,000. Above this amount, the existing 1% rate will continue to apply
  • These measures will apply to both individual and corporate buyers.. The guidance also states that after 31 March 2021, all of the SDLT rates and bands applying on 7 July 2020 will resume.

This move by the Chancellor is in response to the 50% decline in housing transactions caused the Coronavirus and the widespread lockdown imposed by the UK government


The new bands until 1 April 2021 will be


Relevant consideration                                                               Percentage                    

So much as does not exceed £500,000                                           0%

So much as exceeds £500,000 but does not exceed £925,000           5%

So much as exceeds £925,000 but does not exceed £1,500,000        10%

The remainder (if any)                                                                    12%


Special provisions apply for purchasers of shared ownership properties. They can opt to pay SDLT in one of two ways

  • Market Value election.

Under this method they SDLT based on the total market value of the property even though they are generally only buying an initial share in it. They do not pay any more even if they go on to staircase to further shares. Typically this would result in some SDLT being payable. Given the increase in the nil rate band, this would be the option chosen by buyers of shared ownerships to April 2021.

  • Payment in stages.

Under this method the buyer pays SDLT only on the initial share they have purchased. Typically, this means they’ll pay less to begin with.


If further shares are purchased there is still no SDLT payable until the purchaser acquires greater than an 80% share-although an SDLT return must still be completed for each share acquired l. Once the share of the property goes over 80%, the shared owner must fill in a return and pay any SDLT due on both the transaction that took them over 80% and any further transactions.

The amount of SDLT due is based on the total amounts paid for the property so far. This is because the transactions count as linked transactions for SDLT.

Whilst this would often be the preferred option in order to avoid paying any SDLT for some time , and perhaps none at all if the property is sold before the 80% share is exceeded, purchasers during the increased threshold period will be well advised to choose option 1 above.


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