Residential Stamp Duty Land Tax holiday announced

14 July, 2020

On 8 July 2020 the Chancellor announced an SDLT ‘holiday’ from 8 July 2020 to 31 March 2021 (inclusive). Rates will then go back to what they were before. Only residential rates of tax are reduced. Non-residential rates remain the same.

Buying residential property

Most human buyers of residential property will pay no SDLT on the first £500,000. If the price is more than £500,000, previous rates are reduced by £15,000.

Buyers of second homes, and others who have to pay residential surcharge, will pay 3% of the price up to £500,000 (unless the price is below £40,000, when nothing is payable). Above that there is a £15,000 reduction on previous surcharged rates.


  Normal SDLT Surcharged SDLT
Price Before Now Before Now
£100,000 £0 £0 £3,000 £3,000



£7,500 £6,000



£14,000 £9,000



£22,000 £12,000



£30,000 £15,000






























Taking a new lease of residential property

The tenant under a new lease of residential property pays no SDLT if the NPV (“net present value”) of the rent does not exceed £500,000 (the threshold is usually £125,000). Above the threshold the rate of tax is1%.


If the rent does not exceed £17,500 a year in the first five years, no SDLT will be payable on rent however long the lease lasts, even 1000 years.

No SDLT is payable on a lease for five years if the annual rent is £110,000 or less.


When do the reductions apply?

SDLT is normally payable after the “effective date” of a transaction, which is normally completion – the day when the price is paid and the keys are released. Occasionally a contract will be “substantially performed”, such as when a buyer is allowed to occupy the house before the transaction is completed. That too is an “effective date”.

The SDLT reductions apply where the effective date is between 8 July 2020 and 31 March 2021 inclusive.

It is a temporary change. The rates that applied on 7 July will again apply on and from 1 April 2021. Purchasers whose effective date was on or before 7 July cannot apply for any refund.



First-time buyers
The new reductions are more beneficial than first-time buyer’s relief, and they are available to everyone whether a first-time buyer or not. First-time buyer’s relief has therefore been suspended during the SDLT holiday.

Companies must pay 15% on the purchase of certain dwellings. That rate has not changed. However, where 15% does not apply, residential surcharge does, and companies benefit from the reduction in the same way as other surcharged buyers.

Multiple dwellings relief (MDR)
Where two or more dwellings are acquired a buyer can often claim multiple dwellings relief, which can substantially reduce the amount of SDLT payable. However, if MDR is claimed there is a minimum tax rate of 1%, so it is better not to claim the relief if the total price for all the dwellings would be taxed at 1% or less.

Linked transactions
Sometimes two or more transactions are “linked”. If a transaction that completes during the ‘holiday’ is linked with one that completes outside it, special rules apply and the buyer will need to take specialist advice.

Mixed use
Where residential and non-residential property are bought together, such as a shop with a flat above, the whole transaction is taxed at non-residential rates – which are normally cheaper than normal residential rates. For prices up to £1.215m, the reduced residential rates will be cheaper than non-residential rates – and it may make mixed-use property less attractive for some buyers.

Non-residential rates are always cheaper than the surcharged rates, however.