Stamp Duty Land Tax deadline – Stick or twist
The Stamp Duty Land Tax (SDLT) holiday was introduced last July to stimulate the property market following the first Covid lockdown. It certainly achieved this objective, as the market has been buoyant ever since with large volumes of transactions. However, there is concern about the impending SDLT holiday deadline on 31st March 2021 and whether this should be extended, particularly in view of the delays as referenced in our previous e-news.
There has been traction within the property sector for many months to review the deadline to avoid the ‘cliff edge’ and, after an e-petition obtained more than 100,000 signatures, a lively debate took place in Parliament last week (1st February). There is a fear that many transactions will fall through because of the increased tax liability or that there will be a prolonged period of price renegotiation to ‘balance the books’ for buyers.
There was no conclusion to the debate, as expected, but a number of different proposals were put forward, such as:-
- Retain the deadline date of 31st March 2021
- Extend the deadline date for a further period, say a further 3 months
- Maintain the threshold at £500k permanently
- Remove SDLT completely
- Taper off relief – which would allow those parties at a sufficiently advanced stage to continue with the transaction and obtain the benefit
It seems that retaining the low threshold or removing SDLT are remote possibilities; if there is any change to the current status quo it is more likely to be in the form of an extension or taper relief.
With a large number of transactions ongoing and the house buying process subject to delays due to the effects of Covid, it’s clear that if the deadline remains as scheduled then many will ‘miss out’.
One proposal currently gaining momentum is replacing SDLT and council tax to create one single annual property tax. This is not a new concept – more a variation of the ‘mansion tax’ proposed by the Liberal Democrats in 2015. The rationale behind this is that the current system is out of date, confusing, unpopular and unfair and it is believed that a new approach may ‘level up’ the playing field.
Ultimately, the SDLT holiday deadline remains in place for the end of March and, if there is to be any change to this, then this will only be announced at the budget scheduled for 3rd March 2021. So, watch this space! The reality is that there is significant income generated by SDLT and so, at a time of unprecedented public spending, with no real sign of this abating, the revenue is very much needed.
With just over six weeks to go, the message is very clear to all those involved in the property sector, and for all those trying to move to take advantage of the SDLT holiday – ‘carry on as you are’. We have been advising all clients, since December 2020, that they must have a contingency to pay for the additional SDLT liability and that no guarantees or assurances can be given. But we are doing all we can.
For further information on stamp duty land tax, or buying and selling property generally, then please contact the experts in our residential real estate team.