Property industry news: Chancellor announces stamp duty holiday 8 Jul 2020
The Chancellor, Rishi Sunak, has provided a welcome boost to the property industry today, with the announcement of a stamp duty holiday in order to stimulate the property market post-lockdown.
For six months starting on the 8th July 2020, until the 31st March 2021, the threshold for stamp duty has been raised from £125,000 to £500,000.
We’ve put together this post so you can find out exactly what that means for you.
What is stamp duty?
Stamp duty is a tax paid by people purchasing land or property across the UK, although there are three things which have an affect on how much you pay:
- Where in the UK it is
- The price paid
- Whether the buyer has owned property before
The announcement today applies to England and Northern Ireland, and could save buyers up to £15,000 provided they complete on their purchase in the six month window between 8/7/20 and 31/3/21.
How does this affect...
first time buyers?
Usually first time buyers pay no tax up to the value of £300,000 and then 5% on anything between £300,000 and £500,000.
So if a first time buyer was buying a property for £500,000 it would cost them £10,000 in stamp duty.
Under the chancellor’s scheme, the same buyer won’t need to pay any stamp duty provided they aren’t paying more than £500,000 for the property and they complete before the deadline on the 31st March 2021.
people looking to buy-to-let, or buy a second home?
In England and Northern Ireland, buyers who are purchasing a second property or who are buying to let are usually subject to an extra 3% stamp duty.
Under the chancellor’s plans, they will benefit from the stamp duty holiday up to £500,000, but they will still need to pay the 3% extra duty on the entire price of the property they’re purchasing.
buyers who have bought property previously?
For people who have purchased property before, stamp duty usually applies as follows:
- 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. 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, provided the sale is completed between 8th July 2020 and 31st March 2021.
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If you're a first time buyer, you might also like our guide to purchasing a property in London.
