Nature of the temporary threshold
To help boost house sales during the COVID-19 pandemic, the SDLT residential threshold was temporarily increased. Similar measures were introduced in Scotland in relation to land transaction tax (LTT) and in Wales in relation to land and buildings transaction tax (LBTT).
SDLT: 8 July 2020 to 30 June 2021
A higher temporary residential SDLT threshold of £500,000 applied in England and Northern Ireland where completion took place between 8 July 2020 and 30 June 2021. The usual rates applied to any consideration in excess of £500,000.
SDLT: 1 July 2021 to 30 September 2021
From 1 July 2021, the SDLT residential threshold drops to a new temporary level of £250,000. If you are in the process of buying a house and missed the 30 June 2021 completion deadline, you will be able to save SDLT of up to £2,500 if you complete by 30 September 2021.
The residential rates applying during this period are as set out in the table below.
Consideration Only or main home Second and subsequent properties
Up to £250,000 0% 3%
The next £675,000 (£250,001 to £925,000) 5% 8%
The next £575,000 (£925,001 to £1.5 million) 10% 13%
Remaining amount 12% 15%
From 1 July 2021, the threshold for first-time buyers reverts to £300,000 where the consideration is £500,000. First-time buyers pay no SDLT on the first £300,000 and pay SDLT at the rate of 5% on any consideration in excess of £300,000 up to £500,000. If the consideration is more than £500,000, the above rates and residential threshold apply.
SDLT: From 1 October 2021
The residential SDLT threshold reverts to its usual level of £125,000 from 1 October 2021. Purchasers will pay SDLT at a rate of 2% on the portion from £125,000 to £250,000. Above £250,000, the rates are as in the table above.
Second and subsequent properties
Investors and second-home owners also benefit from the temporary residential thresholds as the 3% supplement is added to the residential rates as reduced.
The LTT threshold in Scotland was increased to £250,000 from 15 July 2020 until 31 March 2021. However, this period was not extended, and the threshold reverted to £145,000 from 1 April 2021. As in England and Northern Ireland, those buying second and subsequent properties benefited from the higher threshold; the 4% supplement was applied to the reduced residential rates.
The LBTT threshold in Wales was increased to £250,000 from 27 July 2020 to 30 June 2021, reverting to £180,000 from 1 July 2021. Unlike the rest of the UK, purchasers of second and subsequent properties in Wales did not benefit from the higher threshold.
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