On Wednesday, Chancellor Rishi Sunak delivered his Summer Statement announcing his plans to raise the Stamp Duty threshold on which buyers start to pay the levy from £125,000 to £500,000 until 31st March 2021.
With a bid to spark growth and boost jobs throughout the UK economy in the wake of the coronavirus pandemic, this news is well-timed for the housing market, particularly as the post-lockdown surge in activity, is expected to level off, as pent-up demand falls. And with Rightmove reporting traffic to their property website spiked by 22% within the first 30 minutes of the Chancellor’s speech, this may be the restart the property market needs.
So whether you’re a first-time buyer, second-stepper or an older homeowner looking to move this year, with stamp duty slashed to zero for nearly 90 per cent of homebuyers across the country, it means you could make significant savings up to £15,000 in tax when buying your next home. Read on to see how much the Stamp Duty holiday could save you.
What is Stamp Duty?
Stamp Duty is a tax payable when you buy a residential property or land in England and Northern Ireland. Other parts of the UK work differently, in Scotland, Land and Buildings Transaction Tax must be paid on purchased properties or land, while in Wales a Land Transaction Tax must be paid for sales that were completed on or after 1 April 2018. The changes made only apply to buyers in England and Northern Ireland, at this stage, it’s unclear whether Scotland and Wales will follow suit with similar tax relief options.
How much stamp duty will I have to pay?
Whether you’ve previously owned property or you’re a first-time buyer, up until 31st March 2021, you WILL NOT have to pay Stamp Duty on your main property costing up to £500,000.
Previously you would have paid 2% Stamp Duty on the property purchase price of £125,000 upwards, rising to 5% above £250,000, or if you were a first-time buyer, you would have paid no Stamp Duty up to £300,000, the current measures seek to replicate the relief previously afforded to first-time buyers.
For properties costing over £500,000, you’ll be taxed at a graduated rate on the amount above the thresholds starting at 5% for property purchase prices between £500,001 to £925,000, rising to 10% between £925,001 and £1.5 million, and 12 % above £1.5 million.
Stamp Duty on your main home
|Property Purchase Price||SDLT Rate|
|£0 – £500,000||0%|
|£500,001 to £925,000||5%|
|£925,001 to £1.5 million||10%|
Stamp duty on buy-to-let and second homes
For those buy-to-let investors and those buying a second home, an additional 3% in Stamp Duty is payable on top of the revised rates for each band up until 31st March 2021.
Although the changes made don’t make as much of a difference on Stamp Duty bills for second homes and buy-to-let properties, it does make property purchases temporarily cheaper (given usual surcharge is between 5-8%). The increased rate does not apply to property transactions below £40,000.
Stamp Duty on your second home and buy-to-let
|Property Purchase Price||SDLT Rate|
|£0 – £500,000||3%|
|£500,001 to £925,000||8%|
|£925,001 to £1.5 million||13%|
The Stamp Duty Holiday started on the 8th July and runs until 31st March 2021. It’s hoped the changes made will make it a lot easier for people across England and Northern Ireland to purchase a home, particularly those who’re looking to buy homes at the lower end of the market, with the average stamp duty bills expected to fall by £4,500. If you want to find out exactly how much Stamp Duty you will pay, click on the government’s Stamp duty Calculator to find out more
If the Stamp Duty cut has piqued your interest about moving house, Check 4 Houses is a local, award-winning online estate agent who’d be delighted help you make the right move. To book a free valuation, or to find out more about what we do or about what the Stamp Duty holiday could mean for you, please give us a call on 01252 819725 or visit us at www.check4houses.co.uk.