Stamp Duty tax breaks in response to the COVID-19 pandemic

August 24, 2020Categories: Landlords, Lettings
Person sat at a desk with a calculator and notebook

Stamp Duty Land Tax, as it is called in England, is the tax you pay when you buy a property. Much like income tax, it’s banded, with a different rate applied to different portions of the purchase price. Bands and rates are different in Wales, which has a Land Transaction Tax, and Scotland, where it’s a Land & Buildings Transaction Tax.

Since the modern concept of ‘Stamp Duty’ was introduced in the late 1950’s. there have been a number of changes to the system. Most recently, a higher rate was introduced for additional purchases above the first residential property: 3% extra in England and Wales, 4% extra in Scotland.


So, until 08 July, the bands and rates for England were:

Purchase price Single homeowners Investors / Second homeowners
Below £125,000 0% 3%
Portion from £125,001 to £250,000 2% 5%
Portion from £250,001 to £925,000 5% 8%
Portion from £925,001 to £1.5m 10% 13%
Portion above £1.5m 12% 15%

But now there’s some good news for investors and homeowners across the UK. Last month, in a move designed to help stimulate the housing market, the Government announced there would be a temporary standard-rate Stamp Duty ‘holiday’ for purchases below £500,000 in England (£250,000 in Scotland and Wales). The rates, bands and effective dates vary between the nations, but each country has made changes that will be in effect until 31st March 2021.

Investors and second-home owners will still have to pay the higher rate but, in England and Scotland, you will benefit from the temporary zero standard rate. Unfortunately, in Wales, the relief only applies for single-home owners.

Greatest potential saving is for investors in England

While you’ve still got to pay the 3% higher-rate charge for additional properties beyond your primary home, you’ll benefit from the zero standard rate for purchases up to £500,000 in value.


For example, this is the Stamp Duty you’d pay if you bought an investment property in England for £350,000:

Pre 08 July 2020
First £125,000 x 3% = £3,750
Next £125,000 x 5% = £6,250
Next £100,000 x 8% = £8,000
Total SDLT = £18,000

08 July 2020 to 31 March 2021
£350,000 x 3% = £10,500

That’s a saving of £7,500. If you bought a property for £500,000, you would save £15,000.

That kind of saving means you might be able to:

  • Buy a slightly more expensive property
  • Put down a bigger deposit and potentially secure a better mortgage rate
  • Spend extra on improvements to make the property even more attractive to tenants

…or just save money!


In Scotland and Wales

In Scotland, there’s no stamp duty on standard residential purchases up to £250,000, but investors will still have to pay the Additional Dwelling Supplement of 4%.

However, in Wales, although the zero-rate threshold has been increased from £180,000 to £250,000 for standard residential purchases, additional properties will attract the same tax rates as before:

  • the higher-rate charge of 3% on the first £180,000
  • the standard LTT rate of 3.5% for the portion from £180,000 to £250,000 plus the additional 3%.

This means investors in Wales won’t see any benefit during this ‘holiday’ period, in contrast to those in England and Scotland.

What effect could this have on the market?

This stamp duty holiday comes hot on the heels of two other significant factors:

  1. The recent government announcement that the UK officially entered a recession in August
  2. Global stock markets being in a volatile state.

Although the housing market tends to stagnate and even fall in times of economic uncertainty, it can often provide great opportunities for investors to secure property at a discount. And if you can also save thousands of pounds on purchase costs, that makes buying to let even more attractive.

So, as well as current landlords expanding their portfolios, we could see new investors entering the long-term Buy to Let market, taking advantage of these unusual times.

So what should you do if you’re thinking of buying this year? Well, as always, it’s important to focus on your own local market and take advice from experts who can help guide you towards the best deals and most appropriate investments for you. Just contact your local Your Move branch and make an appointment to speak to one of our Buy to Let experts.


Have you tried our new Stamp Duty Calculator?