On Wednesday 3 March 2021, the Chancellor of the Exchequer, the Rt Hon Rishi Sunak MP delivered his Budget 2021 to Parliament wherein we learnt of the government’s spending and tax plans for the new financial year.
It will come as welcomed news for many to learn that the temporary increase to the residential stamp duty nil rate band to £500,000 will now be extended until 30 June 2021. What this means for residential properties is:-
- up to £500,000 will benefit from paying no stamp duty at all;
- the next £425,000 (the portion from £500,000 to £925,000) will pay stamp duty at a rate of 5%;
- the next £575,000 (the portion from £925,001 to £1.5 million) will pay stamp duty at a rate of 10%; and
- the remaining amount (the portion above £1.5 million) will pay stamp duty at a rate of 12%.
The stamp duty relief came into force originally from 8 July 2020 but it was set to end on 31 March 2021 presenting a “cliff edge” for transactions not completed by that time with the rates abruptly going back up. This presented a problem for many reasons one of which was the buying and sale process of many residential properties had been impacted by delays as a result of the governments Covid-19 restrictions. Now, instead of an abrupt end to the stamp duty relief period, a decision has been made for the a slow increase of rates after 30 June 2021. So, from 1 July 2021, the nil rate band will reduce from £500,000 to £250,000 until 30 September 2021 returning to £125,000 on 1 October 2021.
If you would like to read the key elements of the 2021 Budget, click here
For more information about Stamp Duty Land Tax, click here