On the 8th July 2020, in his Summer Statement, British chancellor Rishi Sunak, announced a stamp duty holiday that will run until the end of March 2021.
Investors will have likely expected it not to apply to buy-to-let purchases or second homes as the government have only increased taxes and tightened restrictions for lending on their purchases in recent years. It was a pleasant surprise to many that the temporary break in taxation includes buy-to-let purchases.
What is the stamp duty holiday?
Effective from the 8th July 2020 and running until 31st March 2021, anyone buying a residential property in England or Northern Ireland as their primary residence will not pay any Stamp Duty Land Tax (SDLT) on a property valued at £500,000 or less.
The previous threshold was £125,000 before any SDLT was payable. A purchaser now buying a property, to serve as their main residence, for £500,000 would pay £15,000 as opposed to the £30,000 tax bill they would have previously received – at this level tax has been halved.
Do the changes also apply to property investors and overseas buyers?
Whilst the stamp duty holiday did extend to investors the 3% surcharge remains in place. The same surcharge applies to a buyer based overseas but they too benefit from the stamp duty holiday.
Until 31st March 2021 property investors can buy any UK residential property valued below £500,000 and will only pay the 3% SDLT surcharge.
New SDLT holiday rates – effective until 31st March 2021
| Tax Band | Main Residence | Investment property /second home |
| £0-500,000 | 0% | 3% |
| £500,001-£925,000 | 5% | 8% |
| £925,001-£1.5 million | 10% | 13% |
| £1.5million + | 12% | 15% |
The stamp duty holiday only extends to residential property purchases, purpose built student accommodation is not included.
Moving investment property into a company structure
For some, this change will make it more appealing to move their personally owned investment property over into a limited company structure in order to take advantage of the tax relief available on mortgage interest as this move would usually incur a stamp duty charge.
Not is a great time to explore your position with your advisor to ensure you’re making the most of the present opportunity.
What happens after 31st March 2021?
From the 1st April 2021, Stamp Duty Land Tax will return to the previous rates with immediate effect.
Overseas investors must also be mindful that as it stands, from 1st April 2021 a further tax increase is set to come in. An additional 2% surcharge is to apply to purchases made by non-residents buying residential property in England or Northern Ireland.
Time to capitalise on the opportunity
In the days that have followed the announcement, agents are widely reporting that they’ve been inundated with enquiries from those wanting to take advantage of the tax holiday. Being wary of the rush some might choose to sit back and wait, the risk is then missing the saving altogether and being hit by a considerably higher tax bill next year.
UK real estate offers investors the opportunity to place their money into a tangible asset, proven to be resilient regardless of economic or political climates, that works exceptionally well for those with a long-term view.
With an investment expert working on your side, you will be provided with all the necessary information to ensure you make a well-informed investment purchase. To talk to a member of our team regarding your plans for UK property investment please do contact us. We’re available on the phone +44 (0) 2039507939 or send us an email at info@thirlmeredeacon.com
