This week’s Mini-Budget announcement has seen the Chancellor, Rishi Sunak, declare a temporary stamp duty holiday with immediate effect.
In a bid to boost the property market, homebuyers in England and Northern Ireland will no longer have to pay stamp duty on homes up to £500,000 until 31 March 2021.
The Chancellor has suggested that the average stamp duty bill is set to fall by £4,500.
But what exactly does the latest stamp duty holiday mean for homebuyers? What are the details of the tax threshold rise and what does this mean for those completing a purchase?
Gordon & Co. have all your stamp duty holiday questions answered.
What is stamp duty?
Stamp duty is a tax normally paid by all homebuyers, however, the amount paid to the government varies across the UK depending on where you are located and the price of the property.
Stamp duty can add thousands of pounds to homebuyer’s costs.
What is the stamp duty holiday?
In a bid to help buyers struggling due to the COVID-19 (coronavirus) pandemic and to boost the property market, the tax threshold for stamp duty has been temporarily raised until March 2021.
The chancellor has announced the temporary holiday on stamp duty on the first £500,000 of all property sales in England and Northern Ireland.
Why have the changes been introduced?
The temporary stamp duty changes have been introduced in a bid to help homebuyers who have been impacted financially as a result of the COVID-19 crisis. It is also intended to help boost the UK property market hit by the nationwide lockdown.
When does the stamp duty holiday start?
The Chancellor has announced that the stamp duty changes have come in with immediate effect.
How long will my stamp duty holiday last?
Homebuyers in England and Northern Ireland will no longer have to pay stamp duty on homes up to £500,000 until 31st March 2021.
Where does the UK stamp duty holiday apply?
The stamp duty holiday changes apply to homebuyers in England and Northern Ireland only.
What has changed?
Previously, the threshold from which homebuyers would have to pay stamp duty was £125,000, or £300,000 for first-time buyers.
For those buying a property of £500,000 or more, the changes could save as much as £15,000, since they will only pay stamp duty on the portion of the cost over £500,000.
Stamp Duty Holiday Comparison Table
|Purchase price||Old rates||New rates|
|New stamp duty rates apply to house purchases between 8 July 2020 and 31 March 2021|
How much stamp duty will I pay now?
The new changes mean that if you’re buying a property under the new £500,000 threshold, you pay nothing in stamp duty.
For properties with a value of £500,001 to £925,000, the next portion of the property’s price will be taxed at five per cent. For properties with a value of £925,001 to £1.5 million, this portion will be taxed at 10 per cent.
The remaining amount (over £1.5 million) will be taxed at 12 per cent.
How will this impact UK homebuyers?
Rishi Sunak has suggested that the average stamp duty bill is set to fall by £4,500. He has also predicted that nearly nine out of 10 people buying a main home this year will pay no stamp duty at all.
What if I’ve already completed a purchase?
The stamp duty holiday applies from the 8th July, so if you completed a property purchase before this date, you’ll have to pay the normal stamp duty amount.
If you have exchanged contracts and are waiting for completion, you can still benefit from the change. This is because stamp duty is payable upon property completion.
Contact Gordon & Co. today
If the recent news has prompted you into looking to buy a London property, Gordon & Co. can help.
Contact us today to discuss your next property venture.