The Conditional Exemption Tax Incentive Scheme The Conditional Exemption Tax Incentive Scheme provides an opportunity to defer payment of Inheritance Tax or Capital Gains Tax when an item of pre-eminent importance is passed to a new owner either by gift...
As we come to the end of the £250,000 threshold this month, who has really benefitted from the holiday period, was it homebuyers or the economy? From 1 October 2021, the SDLT will return to the pre-pandemic level of £125,000 threshold.
The main objective behind the SDLT holiday introduced in July 2020, initially started at the threshold of £500,000 was to:
- Stimulate the housing market – to get the economy moving during such uncertain times
- Increase expenditure on goods and services
However, this tax break resulted in house prices rising at the fastest rate in the last 17 years during the holiday period. Simply put, the demand outpaced the supply. The question arises, did homeowners actually make a saving from the tax break when the increase in house prices ate into the saving element? Did they end up paying more than they would have otherwise without the increase in prices and SDLT holiday?
On the other hand, the economy certainly gained from the tax break and as Chancellor Rishi Sunak said:
“Every home sold means more jobs protected – helping us to deliver on our Plan for Jobs.
But this isn’t just about the housing market. Owners doing up their homes to sell and buyers reinvesting stamp duty savings to make their new house feel like a home are also firing up local businesses, supporting, creating and protecting jobs across the country.”
Without a doubt, the end of the higher threshold of £500,000 in June 2021 was one of the busiest periods for conveyancers. Not only conveyancers but any housing related business or businesses which provide goods and services to the housing industry. Safe to say Chancellor Rishi Sunak’s objectives were achieved during the height of the pandemic, it kept the market moving.
The long-term impact of the tax break and what is expected after the end of the holiday period is widely discussed. Some take the opinion house prices will overtime fall; there will be a market correction. Perhaps this would mean home buyers do not take such a hit following the end of the SDLT holiday. The aftermath remains to be seen.
Please contact Abby Kailayapillai or Ric Mapp Dos Anjos if you would like any advice in this area.
Fee earner: Abby Kailayapillai
Contact number: 02088723070