There are just days left until the current Stamp Duty Tax holiday is altered in England and Northern Ireland (it will end entirely in Wales!) What do you feel you know about Stamp Duty Land Tax?

What is Stamp Duty?

When you decide to build land or property, you will often pay tax on it. This type of tax is called stamp duty in England and Northern Ireland; it’s called and land transaction tax in Wales and land and buildings transaction tax in Scotland. Since 2014, all of the home nations have used a progressive stamp duty rate system.This system means that you won’t pay a single tax rate on the price of the entire property, but rather, depending on the cost of the property you’re buying, you might pay one rate for one portion and a different rate for another.

How Does the Stamp Duty Holiday Work?

To provide some assistance to home buyers during the coronavirus pandemic, the home nations increased the price at which you began to have to pay this stamp duty (land and buildings/land transaction tax). This assistance is referred to as a stamp duty holiday. This break was initially only until 31 March 2021; however, it was extended until 30 June.The stamp duty holiday doesn’t end abruptly, though; there is a transition in England and Northern Ireland which looks like this:

• Until 30 June. No stamp duty will need to be paid on the first £500,000 of any primary residential property.

• 1 July - 30 September. No stamp duty will need to be paid on the first £250,000 of any primary residential property or £300,000 if you are a first-time buyer.

• 1 October. Standard rates for stamp duty will return.

It is crucial to note that the purchase of the home must be completed before 30 September to qualify for theta reliefs listed above. If you exchange on 30 September or even before but do not manage to complete until after then, you will have to pay a full stamp duty rate.

What About Multiple Dwellings?

You may not have even thought of this, but buying a home with a granny annexe could cost less in Stamp Duty than you think. This is because of Multiple Dwellings Relief, or MDR. As the name suggests, this relief is only available for properties that consist of more than one dwelling. The calculations for Stamp Duty are made based on the average of the total value of the various dwellings. Meaning there could be Stamp Duty Relief For Annexes.This becomes even more relevant when considering properties with annexes. Some considerations need to be made to determine whether the additional space can be regarded as a dwelling. These requirements will include but are not limited to, which facilities it contains and whether it has its own access. If the requirements of a dwelling are met, then this annexe could be considered a separate dwelling and allow a buyer to be eligible for MDR.It can be very easy to miss this potential relief as the calculator provided by the HMRC is intended purely as ‘a guide’ and does not provide the opportunity to calculate for MDR.If you look to buy a home with a separate dwelling, it is essential to mention Multiple Dwellings Relief to your solicitor or even find a stamp duty expert to give you some advice before you potentially overpay.So not only could your garden room increase the value of your property, but if you are selling a home with a granny annexe, this relief could be a real selling point for your potential buyer!