The announcement in the budget was a complete U-turn from the Chancellor’s statement in December 2020 that he had no intention to grant any further extension.

The holiday was initially intended as a stimulus for the property market and many buyers were encouraged to enter the market as a result. Many homeowners advanced their plans to move in order to make the deadline and benefit from the tax relief. However, the lurking deadline was seen my many in the industry as a cliff-edge and buyers and sellers alike were beginning to worry as the end of March date loomed closer.

The of the extension will therefore likely come as a relief for both buyers and sellers who were hoping to take advantage of the holiday but, with the initial deadline fast approaching, were not so optimistic about their transactions completing in time.

The move to extend the holiday also aims to help buyers who may have taken a financial hit because of Covid-19 as well as boosting a property market hit by lockdown.  

The budget announcement confirms that stamp duty land tax will continue to be suspended on the first £500,000 of all sales in England and Northern Ireland until the end of June. Additionally, the nil rate band will be set at £250,000 - double its standard level - until the end of September. This second reduction is aimed at really helping buyers at the lower end of the market. It is also hoped that the extra three-month taper until the beginning of October will make any ‘cliff-edge’ in June feel less steep.

Stamp Duty Land Tax (SDLT) is a tax paid on the purchase of property or land in England and Northern Ireland.

The tax is not payable on the whole of the purchase price, just on the figure over a certain amount. This ‘initial threshold’ is where SDLT starts to apply. 

With the new rules being extended, it now means that if you purchase a property for up to £500,000 before the June deadline, there is no SDLT to pay. 

On purchases over £500,000, buyers will have to pay a 5% tax on the portion of the sale price which is from £500,001 up to £925,000, then 10% on the portion from £925,001 to £1.5 million and then pay 12% on any portion over £1.5 million.  

Different rules apply for second homes.

So, rather than the worrying ‘cliff edge’ we were expecting in March 2021, there will be a staggered reduction from the end of June.