Stamp Duty holiday explained
Yesterday, the Chancellor Rishi Sunak announced a temporary holiday on Stamp Duty on the first £500,000 of all property sales in England and Northern Ireland, starting with immediate effect.
He temporarily raised this tax threshold until March 2021 in order to give the property market a welcome boost and give a helping hand to buyers struggling with these additional costs amid the pandemic.
Alexander Grace Law answers some of the questions you may have about this news below:
What is Stamp Duty?
Stamp Duty is a tax paid by people buying properties. The amount paid differs dependent where you live in the UK and the Chancellor’s announcement applies only to buyers in England and Northern Ireland.
What does the Chancellor’s announcement change for buyers?
It means that anyone completing a purchase on a main residence which costs up to £500,000, will not be required to pay any Stamp Duty on purchases made up to March 31st 2021 when the payment holiday ends.
Before the announcement, Stamp Duty in England and Northern Ireland was paid on land or property sold for £125,000 or more, so this will news will be very welcome to about 9 out of 10 home buyers who sit within this bracket.
Anyone purchasing a property over £500,000 will only be taxed on the property’s value above that amount.
A property costing between £500,001 and £925,000 will be taxed at 5% and after that (£925,001 to £1.5 million) will be taxed at 10%. The remaining amount (over £1.5 million) will be taxed at 12%.
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.
However, 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?
It is all very dependent on how much the property costs, but as an example, before the Stamp Duty holiday, if you bought a house for £275,000, the Stamp Duty you’d have had to pay would have been £3,750.
Certainly better in your pocket!
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