Stamp duty holiday: Everything you need to know about the Chancellor’s announcement 8 Jul 2020
As part of a selection of measures put in place to boost the economy today, Chancellor Rishi Sunak, has provided the property industry with a welcome boost, announcing a stamp duty holiday up to the property value of £500,000 in order to help stimulate the property market post-lockdown.
What is Stamp Duty?
Stamp duty is a tax paid by people buying land or property, based on the purchase price of where they’re buying.
The amount of stamp duty paid to the government depends on a few factors:
- Where in the UK it is
- The purchase price (it applies to properties and land costing £125,000 or more)
- And whether it’s the buyer’s first time purchasing property
First time buyers
How will the announcement help first time buyers?
First time buyers usually pay no tax up to the value of £300,000 and then 5% on anything between £300,000 and £500,000.
With this in mind, a first time buyer purchasing a property for £500,000 would normally be paying 5% tax on £200,000 of their property price which would be £10,000. Under the chancellor’s scheme anyone who completes a property sale between the 8th July 2020 and 31st March 2021 will not need to pay any stamp duty up to the value of £500,000 so the first time buyers mentioned above wouldn’t need to pay a penny.
This is useful in the context of those buying for the first time in that price bracket, as lenders are currently requiring larger deposits – and not having to pay stamp duty frees up some extra cash.
Home movers
What about those who have owned properties before?
For people who have purchased property before, the stamp duty rates are normally:
- 2% on properties sold for £15,0001-£250,000
- 5% on £250,001 – £925,000
- 10% on £925,001-£1.5m
- 12% on £1.5m+
Someone spending £248,000 to move home – the average cost of a home in the UK – would have previously paid £2460 in stamp duty. However, under the chancellor’s announcement, as the value of the property is below £500,000 they wouldn’t need to pay anything in tax at all provided the sale is completed between 8th July 2020 and 31st March 2021.
Landlords and second home owners
What about buying to let, or owning multiple properties?
In England and Northern Ireland, buyers who are purchasing a second property or are buying to let are usually subject to an extra 3% stamp duty.
Under the chancellor’s plans, they will be able to benefit from the stamp duty holiday up to £500,000, but they will need to continue to pay the 3% extra duty on the entire price of the property they’re purchasing.
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