News

07/09/20Chancellor brings in Stamp Duty holiday, how much could you save?

As lockdown measures were brought in, property viewings ground to a halt and the number of sales fell sharply. If you were hoping to purchase a property, the good news is that the sector is now open for business again and you could benefit from a Stamp Duty holiday.

Following weeks of delays, home buyers surged in July. It was the busiest month for home buying in ten years, with more than £37 billion worth of property sales agreed, according to Rightmove. It coincides with Chancellor Rishi Sunak unveiling a temporary reduction in Stamp Duty rates. Whether you want to move up the ladder, purchase a holiday home or invest in Buy to Let, it could save you money.

Raising the Stamp Duty threshold

Unless you are a first-time buyer, you would usually need to pay Stamp Duty when buying a property in England or Northern Ireland. Scotland and Wales also have similar property taxes in place.

Previously, the Stamp Duty threshold was just £125,000. With the average property in the UK now worth £231,855, according to the House Price Index, the vast majority of buyers would need to pay some Stamp Duty. However, if you purchase before 31st March 2021, the threshold has increased to £500,000. As a result, 90% of buyers will not pay Stamp Duty during the temporary reduction.

It could save you thousands on the cost of moving. The table below highlights the potential savings.

Purchase price Stamp Duty rate payable until 31st March 2021 Amount of Stamp Duty payable before 31st March 2021 How must will you save?
£100,000 0% £0 £0
£200,000 0% £0 £1,500
£300,000 0% £0 £5,000
£400,000 0% £0 £10,000
£500,000 0% £0 £15,000
£750,000 0% on the first £500,000

5% on £500,000 to £750,000

£12,500  

£15,000

 

£1 million 0% on the first £500,000

5% on £500,000 to £925,000

10% on £925,000 to £1.5 million

£28,750 £15,000
£1.5 million 0% on the first £500,000

5% on £500,000 to £925,000

10% on £925,000 to £1.5 million

£78,759 £15,000
£2 million 0% on the first £500,000

5% on £500,000 to £925,000

10% on £925,000 to £1.5 million

12% on £1.5 to £2 million

£138,750 £15,000

 

What does the Stamp Duty holiday mean for you?

The impact of the Stamp Duty holiday, if you are looking to buy a property, will depend on your position.

  • First-time buyers: For most first-time buyers, the Stamp Duty reduction will not result in lower costs but it has stimulated the housing market, you may find more properties to meet your criteria available now.
  • Home movers: Most home movers will not need to pay Stamp Duty if they purchase before the end of March 2021. As a result, you are likely to save thousands of pounds on the cost of moving.
  • Purchasing a second home or Buy to Let property: You still benefit from the Stamp Duty holiday even if the new property will not be your main home. You will need to pay the additional 3% Stamp Duty surcharge applied to second homes, but the overall cost will still be lower. It can make now the perfect time to invest if it is something you have been considering.

When to file your Stamp Duty return

Even if the Stamp Duty holiday means you do not need to pay the tax, you still need to file a return. You have 14 days to do this from when the purchase is complete, you must pay any Stamp Duty due at this point too. Usually, your solicitor will deal with this on your behalf. However, you can also file it yourself. If a return is filed late, interest will be added.

The Stamp Duty holiday can mean it is the perfect time to move if it is something you have been considering. If you would like to discuss mortgage options or how investing in property fits into your wider financial plan, please get in touch.