Stamp Duty threshold 2021: What is the normal Stamp Duty Land Tax rate?

Budget 2021: Sunak announces stamp duty nil rate extension

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Stamp Duty Land Tax (SDLT) is paid by the buyer of a residential property in England or Northern Ireland over a certain price. A tax break has now been implemented to encourage the property market to keep moving amid the coronavirus pandemic. Here is everything you need to know.

What is the normal SDLT rate?

Before the pandemic hit, the Stamp Duty threshold was on residential properties above £125,000, or non-residential properties above 150,000.

Last summer, the government temporarily increased the amount at which the tax is paid to £500,000, for property sales.

The tax break was due to end on March 31, but it will now end on June 30.

What happens after June 30?

After June 30, the starting rate of Stamp Duty will be £250,000 until the end of September.

Stamp Duty will then return to the usual threshold and will be paid on property sold for more than £125,000.

The extension means anyone completing a purchase on a main residence costing up to £500,000 before June 30 will not pay the tax.

More expensive properties would only be taxed on their value above that amount.

Anyone purchasing a second residential property will be charged a three percent surcharge on each of the threshold bands.

Companies buying residential property worth less than £500,000 until June 30 will benefit from the government changes, as will companies that buy residential property of any value when they meet the relief conditions.

If you are buying to let, as a landlord, you will have to pay SDLT if the income from a short term property let, residential tenancy or lease is above the threshold.

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From 1 April 2021, a two percent surcharge will be added to each of the rates below for buyers who are non-UK residents.

You can use this Stamp Duty calculator to work out how much you might need to pay.

Tom Bill, head of UK residential research at property group Knight Frank, said: “The extension is fair because completion dates for buyers and sellers have been jeopardised through no fault of their own.”

Sarah Coles, personal finance analyst at Hargreaves Lansdown, said: “The extension will be a significant relief to people who were stuck in the middle of the buying and selling process, watching time tick down towards the deadline.”

She added: “There’s a good chance it will boost enthusiasm for buying and selling again, particularly as we head into the key spring months.”

Rachel Springall, finance expert at Moneyfacts.co.uk said the extension gives borrowers a better chance of making the deadline “and could retain borrowers who were going to pull out of the house purchase process”.

Laith Khalaf, a financial analyst at AJ Bell agreed that there is justification for the extension but pointed out the move comes at a cost.

She said: “It’s not a cheap measure, estimated to cost the taxpayer around £1.6bn.”

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