On 23 September 2022, the Chancellor announced an immediate permanent reduction in SDLT for certain residential property acquisitions in England and Northern Ireland.
Firstly, the residential nil-rate tax threshold is increased from £125,000 to £250,000. This will result in SDLT savings of £2,500 on homes costing £250,000 or more.
In addition, the nil-rate threshold for First Time Buyers’ Relief is increased from £300,000 to £425,000 and the maximum amount that an individual can pay while remaining eligible for First Time Buyers’ Relief is increased to £625,000. There is therefore a maximum additional benefit of £6,250 for purchases exceeding £425,000 but not exceeding £625,000 and a maximum potential competitive advantage over non-first time buyers of £8,750.
The existing 3% additional dwelling supplement for buyers of second homes, corporate buyers and other property investors will remain. Further, the additional 2% foreign buyers surcharge has applied to residential property acquisitions since April 2021 and will also remain.
For bulk residential transactions, the purchaser can treat the transaction as non-residential and therefore subject to non-residential rates, or can treat as residential and claim multiple dwellings relief (MDR - where the mean average dwelling price is used to calculate the SDLT due) if this gives a better result. Following the increase in the nil rate band, the maximum average dwelling price at which multiple dwellings relief provides a more favourable outcome than applying the 5% commercial rate has increased from c.£335,000 to c.£415,000.
The government has also announced that it will introduce Investment Zones across the UK which will benefit from tax incentives, including full SDLT exemption on land in English and Northern Irish Investment Zones bought by businesses for commercial or residential development. The locations and timing are yet to be finalised, although the English regions being discussed are listed here.
If you would like to discuss this further, please get in touch with Michael Hope or your usual PwC Stamp Taxes contact.