What Does the Stamp Duty Holiday Mean for Homebuyers?
Today (8 July) the Chancellor Rishi Sunak announced a temporary stamp duty holiday on the first £500,000 of all property sales in England and Northern Ireland, but what does that mean to homebuyers?
The stamp duty holiday is part of the governments bid to help stimulate the economy during the coronavirus pandemic. It will involve increasing the stamp duty threshold from properties valued over £125,000 to £500,000. The ‘stamp duty holiday’ as it is being coined, will stay in place until 31st March 2021, in order to boost the economy and help struggling home buyers, whose finances have been hit due to covid-19.
The changes have been implemented with immediate effect.
Please read our guide on moving during the pandemic for more information.
What is stamp duty and how much does it normally cost?
Stamp Duty Land Tax (SDLT), commonly referred to as Stamp Duty, is paid to the government, when you purchase land or property, valued over £125,000 in England and Northern Ireland.
There are certain exemptions to the rule, for example first-time buyers who are exempt from paying stamp duty on properties up the value of £300,000. Home buyers are required to pay 5% on any amount between £300,000 and £500,000.
People who are buying their next home usually need to stamp duty on any purchase over £125,000. The amount is a sliding scale:
- 2% on £125,001- £250,000.
- 5% on £250,001 – £925,000.
- 10% on £925,001 – £1.5 million.
- 12% on any value above £1.5 million.
People who purchase a second property, or for buy-to-let purposes, are eligible for the tax cut but will need to pay the extra 3% SDLT, which are they were charged under the usual rules.
How much could a buyer save?
Under the usual stamp duty rules if you were to purchase a property for £210,000 you would pay £1700 in SDLT. With the stamp duty holiday, you would pay £0.
It is expected the average stamp duty bill will fall by £4500. With the Chancellor advocating that almost 9 out of 10 home buyers, making a purchase this year will not have to pay stamp duty.
What is the time period for the stamp duty holiday?
The stamp duty holiday came in with immediate effect on 8th July 2020 and will remain in place until 31st March 2020.
Can I benefit if I have completed on a purchase prior to July 8th?
The stamp duty holiday only applies to transactions which are to complete after 8th July 2020. Therefore, if you have already completed on your purchase prior to the 8th you will need to pay the usual amount of stamp duty.
Kindly shared by TRUE Solicitors LLP