Last week the chancellor announced a temporary stamp duty holiday on the first £500,000 of all property sales in England and North Ireland.
We’re going to breakdown exactly what this means and how it works so you can take advantage.
What is Stamp Duty?
Stamp Duty Land Tax is a tax paid by people buying properties.
The amount handed to the government depends on where you are in the UK, and the price of the property. The changes to stamp duty will only apply to buyers in England and Northern Ireland.
What has changed?
With immediate effect as of 8th July the government has temporarily increased the stamp duty threshold to £500,000 for property sales in England and Northern Ireland, until 31 March 2021,
Anyone completing on a main residence costing up to £500,000 between 8 July and 31 March will not pay any stamp duty, and more expensive properties will only be taxed on their value above that amount.
This will save buyers as much as £15,000, if they are buying a property of £500,000 or more.
Why is this happening?
The move is aimed at helping buyers who have taken a financial hit because of the coronavirus crisis.
It is also intended to boost a property market hit by lockdown.
According to the Halifax, house prices have fallen for four months in a row.
The average stamp duty bill will fall by £4,500, Chancellor Rishi Sunak has suggested, with nearly nine out of 10 people buying a main home this year paying no stamp duty at all.
However, critics worry it could encourage people who were planning to buy next year to accelerate their plans to take advantage of the tax break. This could leading to a slump in demand when the tax break ends.
Can I still benefit if I’ve already completed a purchase?
The holiday applies from 8 July, which means anyone completing a property purchase before that date will have to pay the full normal stamp duty.
Stamp duty is payable upon completion, so if you’ve exchanged contracts and are currently waiting for completion you will be able to benefit from the change.
How much could a buyer save?
The change will save buyers as much as £15,000, if they are buying a property of £500,000 or more.
Before the stamp duty holiday, if you bought a house for £275,000, for instance, the stamp duty you’d have had to pay would have been £3,750.
That’s based on 0% duty on the first £125,000, 2% on the next £125,000 (£2,500), plus 5% on the final £25,000 (£1,250).