The government will legislate in Finance Bill 2021 to extend the temporary increase to the stamp duty land tax (SDLT) nil rate band for residential property in England and Northern Ireland that was due to end on 31 March 2021 until 30 June 2021.
Purchasers of residential property in England and Northern Ireland.
The nil rate band will continue to be £500,000 until 30 June 2021. Additionally, from 1 July 2021 until 30 September 2021, the nil rate band will be halved to £250,000. The nil rate band will return to the standard amount of £125,000 from 1 October 2021. The SDLT saving should apply to contracts that are substantially performed prior to the end of the holiday even if they are completed after that date. Substantial performance includes paying 90% or more of the consideration and taking possession of the property.
This will be a welcome announcement to the many sellers and buyers who had hoped to take advantage of the SDLT saving but were facing difficulties in completing their transaction before the end of March given lockdown restrictions and the increased activity in the market. Now they will have until 30th June to complete a purchase to lock in a saving of up to £15,000. This saving will then reduce to a maximum £2,500 until the end of September. The proposed tapering of the nil rate threshold until the end of September should help somewhat to reduce the ‘cliff-edge’.