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Temporary SDLT Rate Changes
Between July 2020 and September 2021, the government introduced a temporary Stamp Duty Land Tax (SDLT) holiday to support the property market. This meant the threshold before you started paying SDLT on residential properties was significantly increased, then gradually reduced...
Introduction
Between July 2020 and September 2021, the government introduced a temporary Stamp Duty Land Tax (SDLT) holiday to support the property market. This meant the threshold before you started paying SDLT on residential properties was significantly increased, then gradually reduced before returning to standard rates. Understanding which rates applied to your property purchase depends on your completion date, not when you exchanged contracts.
What is the nil-rate band?
The nil-rate band is the threshold below which you pay no SDLT when buying residential property. Under normal circumstances, this threshold is £125,000. During the temporary changes, this threshold was increased substantially, meaning buyers paid less tax on their property purchases.
The rate that applied to your purchase depends entirely on your completion date — the date when ownership legally transfers — not the date you exchanged contracts or agreed to buy the property.
The SDLT holiday period: 8 July 2020 to 30 June 2021
During this period, the nil-rate band increased to £500,000. This meant you paid no SDLT on the first £500,000 of your property purchase price.
If you completed your purchase during this time, the following rates applied:
- Up to £500,000: 0%
- £500,001 to £925,000: 5%
- £925,001 to £1.5 million: 10%
- Above £1.5 million: 12%
These rates applied to all residential property buyers during this period, regardless of whether you were a first-time buyer or had owned property before. The special rates that normally apply to first-time buyers were replaced by these temporary reduced rates.
The tapered period: 1 July 2021 to 30 September 2021
Rather than returning immediately to standard rates, the government introduced a transitional period. The nil-rate band reduced to £250,000 for purchases completed between 1 July 2021 and 30 September 2021.
The rates during this period were:
- Up to £250,000: 0%
- £250,001 to £925,000: 5%
- £925,001 to £1.5 million: 10%
- Above £1.5 million: 12%
From 1 July 2021, the special rules and rates for first-time buyers (including those purchasing through shared ownership schemes) applied again alongside these temporary thresholds.
Return to standard rates: 1 October 2021 onwards
From 1 October 2021, the nil-rate band returned to the standard amount of £125,000 for residential property purchases. All temporary rate changes ended on this date, and the SDLT system reverted to the rates and thresholds that were in place before 8 July 2020.
Higher rates for additional properties
If you purchased an additional residential property (such as a buy-to-let or second home), you paid an extra 3% surcharge on top of the standard rates. This 3% surcharge applied throughout the temporary rate periods as well.
Higher rates during the SDLT holiday (8 July 2020 to 30 June 2021)
- Up to £500,000: 3%
- £500,001 to £925,000: 8%
- £925,001 to £1.5 million: 13%
- Above £1.5 million: 15%
Higher rates during the tapered period (1 July 2021 to 30 September 2021)
- Up to £250,000: 3%
- £250,001 to £925,000: 8%
- £925,001 to £1.5 million: 13%
- Above £1.5 million: 15%
From 1 October 2021, the 3% surcharge continued to apply, but on top of the standard (not temporary) SDLT rates.
Leasehold properties
The temporary changes also applied to new leasehold sales and transfers. The nil-rate band for the 'net present value' (NPV) of any rents payable on residential leasehold property increased during the temporary periods.
8 July 2020 to 30 June 2021
- NPV up to £500,000: 0%
- NPV over £500,000: 1%
1 July 2021 to 30 September 2021
- NPV up to £250,000: 0%
- NPV over £250,000: 1%
These changes benefited both individuals and companies buying residential leasehold property below the nil-rate thresholds shown above. Companies buying residential property of any value also benefited where they met the relief conditions from the corporate 15% SDLT charge.
Working out your SDLT
SDLT is calculated on a tiered basis, similar to income tax. You pay the relevant percentage on each portion of the purchase price that falls within each band, not the highest rate on the entire amount.
HMRC provides an online SDLT calculator that can help you work out exactly how much tax you owe based on your completion date and circumstances.
Key takeaways
The temporary SDLT rate changes provided significant savings for property buyers who completed their purchases between July 2020 and September 2021. The key dates to remember are:
- 8 July 2020 to 30 June 2021: Nil-rate band of £500,000
- 1 July 2021 to 30 September 2021: Nil-rate band of £250,000
- 1 October 2021 onwards: Return to standard nil-rate band of £125,000
Your completion date — not your exchange date — determines which rates applied to your purchase.
Sources
This article provides general guidance based on current HMRC rules. For advice specific to your situation, speak to your accountant.
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