How does the new Stamp Duty changes affect me?

Chancellor Rishi Sunak announced in his March 2021 Budget that the Stamp Duty holiday has been extended until 30th September 2021, aiding the Government’s plan to boost the economy during the COVID-19 pandemic.

Why is the Stamp Duty Holiday important?

The Stamp Duty holiday was a welcome relief to buyers in England and Northern Ireland when it was introduced in July 2020 as part of the Chancellor’s summer statement. This temporary measure provided the housing market with a lifeline that would in turn help the economy and help buyers who had been financially impacted by the coronavirus crisis.

This has proved popular with buyers, with many taking advantage of the holiday period where they could save up to £15,000. Initially, due to end in March 2021, the holiday was extended until 30th June for properties up to £500,000, this will then be followed by a transition period from July to September. During this time, the band for exemption will be lowered to £250,000, before returning to £125,000 from 1st October 2021.

Anyone buying a second home or buy-to-let property would still have to pay the 3% extra duty due on the full price, this remained unchanged from before the announcement.

What if I have already started the moving process?

If you are already in the middle of buying or selling your property you should remain in contact with your estate agent and solicitor as they will be able to advise you on your next steps. It is important to not rush through the process, such as skipping surveys or valuations, as this causes unnecessary risks.

You can only take advantage of the Stamp Duty holiday if you have completed on your property after 8th July 2020.

What is Stamp Duty?

Stamp Duty is a tax you pay when purchasing a property in the UK, although it slightly varies between countries. In England and Northern Ireland it is called Stamp Duty Land Tax, while in Wales it is known as Land Transaction Tax and in Scotland it is referred to as Land and Buildings Transaction Tax.

The amount of tax you pay varies depending on the property, where it is in the UK, and whether you are a first-time buyer or an existing homeowner. There are slightly different rules for first-time buyers.

How much Stamp Duty will I pay?

Prior to July 2020, Stamp Duty was paid on properties sold for £125,000 or more in England and Northern Ireland.

First-time buyers, however, paid no tax up to the value of £300,000. After this, 5% tax was paid on properties between £300,000 and £500,000.

If you were already a homeowner, you would pay rates as follows:

How much could you save with the Stamp Duty holiday?

According to the Chancellor, the average Stamp Duty bill will fall by £4,500, with nearly nine in 10 people paying no Stamp Duty when buying a main home over the course of the break if purchased in England or Northern Ireland.

Example:

Before the holiday, Stamp Duty on a £200,000 property would have been £1,500, with 0% paid on the first £125,000, and 2% paid on the next £75,000.

Similarly, if the property value was £300,000, the Stamp Duty paid would have been £5,000, based on 0% paid on the first £125,000, 2% paid on the next £125,000, and then 5% paid on the next £50,000.

During the Stamp Duty holiday, all homes valued under £500,000 will pay 0% Stamp Duty until it reduces to £250,000 in June.

What if I live in Scotland or Wales?

Wales has also extended the Stamp Duty holiday, with residential properties up to the value of £250,000 excluded from paying tax until 30th June 2021.

While in Scotland, the tax rates are 2% on £145,001-£250,000, 5% on £250,001-£325,000, 10% on £325,001-£750,000, and 12% on any value above £750,000.