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The Chancellor announced in the Summer Statement an extension to the nil rate band for SDLT (to £500,000) on the purchase of residential property in England and Northern Ireland, effectively reducing the rate of SDLT.  

This is a temporary measure applicable from 8 July 2020, so that if a land transaction completes on or after 8 July 2020, the new threshold (and rate of tax) will apply. 

The measure will be in place until 31 March 2021 and will not apply to a purchase which has been substantially performed or completed prior to 8 July 2020.   

Although the 3% surcharge on additional dwellings continues to apply, the 3% rate threshold has also been extended up to £500,000. 

SDLT applies in varying rates to different slices of the purchase price for the property, with the rate increasing as the consideration increases.  The new rates of SDLT are set out below together with the adjusted rate if the 3% Additional Dwellings Rate applies:

Purchase Price (£)

SDLT Residential Rate (%)

From 08.07.20 to 31.03.21

SDLT Additional Dwellings Rate (%)

From 08.07.20 to 31.03.21










1,500,001 and above




The maximum saving, which will be achieved if the price is £500,000 or above, is £15,000 per dwelling

The SDLT rules have become extremely complex over recent years particularly in respect of identifying what is considered to be residential property and non-residential property.  So given that the announcement only applies to residential property, it will be more important than ever for a purchaser to consider the alternative SDLT classifications and the availability of any SDLT reliefs, such as multiple dwellings relief (MDR) and the "6 or more dwellings" rule. It is also important to note that the relief applicable to first time buyers is effectively suspended by this change and HMRC's website confirms that "
from 8 July 2020 to 31 March 2021 the special rules for first time buyers are replaced by the reduced rates…".

The legislation implementing this change has not yet been published so it is not clear whether the reduction in rate will be available for contracts entered into on or before 31 March 2021 and which complete after this date or only for purchases which complete before that date.   It is prudent to assume that completion or substantial performance of the relevant land transaction will need to occur before April 2021 in order to benefit from these changes.  It is also worth overseas purchasers remembering that an additional 2% rate of SDLT will apply to them from 1 April 2021.

As mentioned above, the SDLT rules remain as complex as ever so please discuss the SDLT considerations of your transactions with the Tax team as early as possible.

If you would like to discuss any of the above, please contact any member of the Tax team.