Stamp Duty Land Tax changes from October 2021

26 August 2021

Stamp duty rates are due to return to the levels which were in place prior to 8th July, 2020 as from the 1st October 2021.  

We advise all our clients purchasing residential property in England and Wales to budget for paying Stamp Duty Land Tax (SDLT) at the standard rates, in the event that a purchase does not complete on or before 30th September 2021.  We are unable to accept responsibility for any SDLT which may be due in respect of your property purchase in the event that completion takes place after this date. 

You can check the rates using the HMRC website https://www.gov.uk/stamp-duty-land-tax 

As you will be aware the partial Stamp Duty Land Tax holiday is due to end in on 30 September 2021.

Between 1 July 2021 and 30 September 2021, the SDLT threshold will be £250,000. 

From 1 October 2021 the rates will return to the pre-holiday rates.

Whilst there is a big saving to be made on completion by 30 September this is not going to be achievable in all cases.  

We cannot make any guarantees as to the speed of ANY transaction as this is BEYOND OUR CONTROL. FOR EXAMPLE, you cannot obtain removers or mortgage funds cannot be released in time by your lender.

You need to be aware that all parties in your chain will need to be able and willing to move. You should also take into account that COVID restrictions may still affect other companies’ working patterns and people may now return to remote working and closing their offices to visitors. Please also bear in mind, that COVID restrictions may have an effect on other parties involved in your transaction, such as local authorities (for searches), surveyors, valuers, mortgage companies, estate agents, banks etc., which are all beyond our control.

In particular you should be aware:-

• Removers are extremely busy. Whilst the legal work may be complete there is also the practical side of the move to consider and you need to ensure you can get a removal slot.  Where you have a chain everyone will need to be able to organise a removal company for the same day.

• Banks are extremely busy. Lenders are stating that they need to be given the full notice period for completion, in accordance with their instructions to guarantee release of funds.  In some cases this is 7 working days.  We need to receive the money the day before completion, as the bank only confirm we will have it on the day, not in time to complete.  This means that we need to request draw down of funds by no later than Monday 20 September to complete on Wednesday 30 September. Whilst we can submit a draw down request prior to exchange of contracts, if the completion date then changes this could mean that the application has to be resubmitted and the window is missed to allow for completion.

Please do note that some mortgage offers are conditional upon the matter completing on or before 30 September 2021. You will need to ensure you are aware of all conditions attached to your mortgage offer and ensure these are met.

Please do also be aware that the standard conditions of sale build in an allowance for delay of completion before you (IF YOU ARE READY WILLING AND ABLE TO COMPLETE) are entitled to rescind the contract.  This may mean that if you agree to a completion date at the end of September and completion falls over into October you will be liable to pay the increased rates of SDLT. So you must budget for the additional SDLT payable. Whilst you may be able to claim this back from the defaulting party you will need to pay it in the first instance within 14 days of completion and you should be aware of this. 

If you are the defaulting party you should be aware that you may be liable to pay back a considerable amount of tax to the rest of the chain that has been incurred because of your default.

The contents of this article are intended for general information purposes only and shall not be deemed to be, or constitute, legal advice, and should not be relied upon as advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article. All content was correct at the time of publishing. Legal advice should always be sought in relation to specific circumstances.