Change to residential SDLT rates


08 July 2020

The Chancellor announced today that, for purchases from and including 8 July 2020 to 31 March 2021, the nil rate band for the standard residential rate of SDLT will be increased to £500k. This applies to all individuals, whether first time buyers or not.

The rates will therefore be:

Amount Rate %
Up to £500k 0%
Next £425k (portion between £500,001 and £925k) 5%
Next £575k (portion between £925,001 and £1.5m) 10%
Remaining amount (the portion above £1.5m)  12%

The temporary rules mean that first time buyers’ relief is replaced by the above rates during this period as it is not necessary. 

This change also benefits companies and others paying the higher residential rates for the same period during which the following rates apply: 

Amount Rate %
Up to £500k 3%
Next £425k (portion between £500,001 and £925k) 8%
Next £575k (portion between £925,001 and £1.5m) 13%
Remaining amount (the portion above £1.5m)  15%

The rules will also affect the SDLT payable in connection leasehold purchases where the calculation relies on what is known as the net present value. The nil rate band applying to the net present value of rent is increased to £500k with anything over £500k being chargeable to SDLT at 1%.

There is no change to the way in which companies (and some other entities) are assessed for SDLT on purchases of residential dwellings over £500,000. For such purchases, the punitive 15% flat rate continues to take precedence and does not benefit from the change. Depending on the specific purchase in question, it may be possible to apply a relief from SDLT which would bring the purchase within the higher rates instead. We will be happy to advise further on your particular circumstances. 

The rates set out above will revert to the former levels on 1 April 2021. 

There may be situations where there was a choice as to whether to use commercial rates or take advantage of multiple dwellings relief. The change in rates will alter the multiple dwellings relief calculation and we would be happy to run through the calculations so that you pay the least amount of SDLT.

For further information regarding today’s announcement please contact Karl Pocock or Benjamin Clarke. Alternatively, if you query relates to residential property please contact Nicola Lebish or Amanda Angel.