In fact, the measures provided in Sunak’s Supplementary Budget, outlining his aims to help the economy regain momentum after the consequences of the coronavirus pandemic, actually only apply to England and Northern Ireland. Since Scotland and Wales have devolved governments, their parliaments make the decisions relevant to their own territories. And, while they have followed suit in announcing short-term tax breaks, there are significant differences that home buyers should be aware of – particularly those for whom location isn’t necessarily a major factor.
It’s also worth noting that these holidays don’t apply in the Channels Islands or Isle of Man – not least as there are currently no equivalent taxes in these jurisdictions.
Even the names of the taxes differ: in England and Northern Ireland, the tax being reduced is the stamp duty land tax; in Scotland, it’s the land and buildings transaction tax; and in Wales, the land transaction tax.
The only point that is consistent is the end date of 31 March 2021, when the property taxes revert to their previous levels.
We have put together the table below to help buyers understand what they need to pay in each home nation:
Sources: UK, Scottish and Welsh governments. Higher rates include additional levies for individuals buying second homes and buy-to-let properties, as well as individuals based overseas. Rates are valid until 31 March 2021, unless a change is announced.
Both in England and Northern Ireland, effective immediately, there is a temporary nil rate band for stamp duty on the first £500,000 of the purchase price of a residential property until 31 March 20211, on the proviso that it is your only home. Additional rates for those buying second homes, investment properties, or buying a property from overseas, still need to be paid, as do the levies for properties bought through a company [and which are not covered in this article].
Those purchasing more expensive homes also benefit from the reduced cost despite the existing rate bands applying to the excess over £500,000. For example, someone buying a property for £900,000 will pay no stamp duty on the first £500,000 and 5% on the balance of £400,000, resulting in a total payment of £20,000. This represents a saving of £15,000.
On new leasehold sales and transfers, the nil rate band, which applies to the ‘net present value’ of any rents payable for residential property, is also increased to £500,000 until 31 March 2021.
Subsequently, the Scottish Government confirmed that it will offer a similar tax break2 to that for England and Northern Ireland. It plans to raise the starting threshold for its land and buildings transaction tax from £145,000 to £250,000, saving buyers up to £2,100 in tax.
From 27 July, most buyers in Wales will not pay any land transaction tax when making a purchase of up to £250,000 until 31 March 20213. For Wales, however, unlike the other home nations, those purchasing second homes or buy-to-let properties will not get any tax breaks i.e. they continue to pay the standard rate of 3.5% on properties over £180,000 and up to £250,000, as well as the additional rate.
To help buyers looking to understand how much you’ll pay on a property, we recommend you use the stamp duty tax calculator for England and Northern Ireland, the land and buildings transaction tax calculator for Scotland, and the land transaction tax calculator for Wales.
For those interested in learning more, it’s worth flagging that Nedbank Private Wealth doesn’t provide individual tax advice, but as a regulated mortgage provider, we are able to introduce individuals, including those located overseas, to legal and tax advisers, if they do not have an existing adviser. We help individuals and companies buy residential property no matter where it is located in the British Isles.
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You can borrow against a UK, Isle of Man or Channel Island-based residence, be it your own home or an investment property. We also lend against investment portfolios, and loans can be denominated in Sterling, Euros or US Dollars.
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Source: Nedbank Private Wealth and (1) HMRC; (2) Revenue Scotland; and (3) Welsh Government.
Your home is at risk if you do not keep up repayments on a mortgage or any other loan secured against it. Nedbank Private Wealth does not provide tax advice, and instead works with tax advisers to ensure clients receive the appropriate advice.
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