Every week, Mansion Global poses a tax question to real estate tax attorneys. Here is this week’s question.

Q. I'm thinking of purchasing a new-development unit in London. How will the stamp duty change impact me?

A. Those looking to buy property in England now can take advantage of a “stamp duty holiday,” which was announced by U.K. Chancellor Rishi Sunak in July.

Stamp Duty Land Tax, or SDLT, is a tiered tax paid at the time the home is purchased. The government has raised the thresholds on those tiers in an effort to boost home sales after the government shutdown due to Covid-19.

More: What Kind of Taxes Can I Expect on a Second Home Outside London?

Until March 31, 2021, buyers will only pay SDLT on the amount of a home purchase that exceeds £500,000 (US$653,100), according to the U.K. government website. There is a 5% tax on the portion of the price between £500,001 and £925,000, followed by 10% on the amount between £925,001 and £1.5 million and finally 12% on the portion above £1.5 million.

When buying a home under the normal SDLT rates, there would be no levy charged on the initial £125,000, but a 2% tax is due on the portion from £125,001 to £250,000. There are five tiers, with the highest rate at 12%, which is charged on the cost of the property above £1.5 million, according to the U.K. government.

The holiday will decrease the average SDLT payment by £4,500, Mr. Sunak said in a statement at the time of the announcement.

For those who already own property, there is also a 3% surcharge on additional home purchases, according to Elizabeth Small, partner at Forsters law firm in London.

The holiday rates apply to home sales in England and Northern Ireland. Scotland and Wales, which have a similar Land and Buildings Transaction Tax, have also increased thresholds for the levy.

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