In recent months, the government have unveiled a range of measures designed to support the economy through the coronavirus crisis. From the furlough scheme to discounts for eating out, the Chancellor has been forced to come up with a range of policy initiatives to kick-start the economy as the country emerges from lockdown.
In his recent summer statement, one of Rishi Sunak’s key announcements was a Stamp Duty holiday. With immediate effect, house buyers in England and Northern Ireland will benefit from a reduction in the amount of tax paid on the purchase, with many buyers paying no tax at all. Similar holidays have been announced in Scotland and Wales.
Here’s everything you need to know about the Stamp Duty holiday and what it means for you.
Scotland and Wales announce tax holiday
Stamp Duty is technically only paid in England and Northern Ireland, as property taxes are different in Scotland (Land & Buildings Transaction Tax (LBTT)) and Wales (Land Transaction Tax(LTT)).
Since the Chancellor’s announcement, both Scotland and Wales have announced their own tax holidays, meaning the taxes will be waived on purchases up to £250,000 in both countries. So, if you buy a property worth up to £250,000 before the end of March 2021, you’ll pay no LBTT or LTT.
The holidays started on 15th July in Scotland and 27th July in Wales and they will both run until March 31st – the same as in England.
In addition, there is one more key difference between England and Wales when it comes to buying a second home. Rebecca Evans, Welsh finance minister, explains: “Unlike in England, this new threshold will not apply to the purchase of additional properties such as Buy to Lets or second homes.”
Chancellor raises Stamp Duty threshold to £500,000 in England and Northern Ireland
Before the Chancellor’s announcement, you would have paid Stamp Duty on homes sold for at least £125,000 in England and Northern Ireland. If you were a first-time buyer, you’d have paid the duty on properties sold for more than £300,000.
In his summer statement, Rishi Sunak raised this threshold to £500,000, at an estimated cost of £1.3 billion to the Treasury.
The announcement means that nine out of 10 people buying a main home between now and the end of March 2021 will pay no Stamp Duty at all, and the average Stamp Duty bill will fall by £4,500.
If you buy a residential property before 31st March 2021 that costs more than £500,000, you only start to pay Stamp Duty on the amount that you pay for the property above £500,000. These rates apply whether you are buying your first home or have owned property before.
This table shows the saving you will make if you’re a home mover buying in England or Northern Ireland before 31st March 2021. If you’re a first-time buyer then you may save a little less, as you’d already have been exempted from Stamp Duty up to a purchase price of £300,000.
|Purchase price||Stamp Duty rate payable until 31 March 2021||Amount of Stamp Duty payable||How much you’ll save thanks to the Stamp Duty holiday|
|£750,000||0% on first £500,000
5% on £500,000 to £750,000
|£1 million||0% on first £500,000
5% on £500,000 to £925,000
10% on £925,000 to £1 million
The Stamp Duty holiday also applies for additional properties, such as second homes, holiday homes, or landlords buying Buy to Let property. Note that the 3% higher rate for purchases of additional properties continues to apply, even during the Stamp Duty holiday period.
Property portal Rightmove have calculated how much English buyers could typically save during the Stamp Duty holiday, depending on which part of the country they live in:
- North East, £646
- Yorkshire and the Humber, £1,550
- North West, £1,368
- East Midlands, £2,222
- West Midlands, £2,262
- South West, £6,100
- East of England, £8,153
- South East, £10,980
- London, £15,000
What if I have already completed a purchase?
If you completed on your purchase before the holiday began, you’ll pay Stamp Duty or the relevant Scottish or Welsh tax at the previous rates.
If you complete between 8th July (England and NI), 15th July (Scotland) or 27th July (Wales) 2020, and 31st March 2021 – even if you agreed the purchase or exchanged contracts before the holiday began – the Stamp Duty holiday will apply.
Get in touch
If you’re thinking of taking advantage of the Stamp Duty holiday, and you need advice on getting the mortgage you need to buy, we’re here to help.
Email [email protected] or call 0131 339 2281 to find out how we can help.
Your home may be repossessed if you do not keep up repayments on a mortgage or other loans secured on it.
Buy to Let (pure) and commercial mortgages are not regulated by the FCA.