Back in July 2020, the chancellor suspended stamp duty on the first £500,000 of property sales in England and Northern Ireland until 31 March 2021. What does this mean for you and how long do you have to take advantage of it?
The stamp duty holiday explained
Stamp duty in England and Northern Ireland is the land tax paid by those purchasing properties. The amount you pay is dependent upon the price of the property.
The stamp duty threshold has increased to £500,000 temporarily until 31 March 2021. This means that those completing on a property purchase costing up to £500,000 before this date will not pay any stamp duty. Better yet, those exceeding this amount will only be taxed on the value above this amount.
The average stamp duty bill will therefore reduce by £4,500 and with a saving of as much as £15,000 if you are buying a property of £500,000 or more. This means the following good news:
- 90% of those buying a main home in 2020 will pay no stamp duty at all.
- there has been a positive boost to house prices, with August 2020 seeing the highest monthly price rise in over 16 years.
To ensure you qualify, get your property on the market now
Given the stages involved in the buying process through to completion, including arranging solicitors, mortgages and surveyors, the average time it takes to sell a property from going on the market to completion is five months.
With this in mind, we recommend that you get your property on the market by the end of October 2020 to ensure that you qualify for the stamp duty holiday. To get the ball rolling, book a free valuation and we’ll get your property on the market as quickly as possible.
So, how much stamp duty will you pay?
Based on the following cost of the property you are buying, here is how much stamp duty you will pay during the stamp duty holiday period:
£500,000 or less: if the house you are buying is your main home, you won’t pay any stamp duty.
£500,001 – £925,000: taxed at 5%
£925,001 – £1.5m: taxed at 10%
Over £1.5m: taxed at 12%
Prior to the announcement, in England and Northern Ireland stamp duty was paid on property and land sold for £125,000 and above. First-time buyers paid no stamp duty up to £300,000. The stamp duty holiday replaces the first-time buyer concession.
If you’re a second home buyer or a landlord then you are also eligible for the tax cut but you’ll still need to pay the 3% extra stamp duty from the previous rules. In Scotland and Wales the rates and rules are entirely different.
The following table explains the previous and new stamp duty rates based on the value of the property:
|Property value||Previous rate||New rate|
Residential properties purchased 8 July 2020 – 31 March 2021 in England and Northern Ireland
Source: HM Revenue and Customs
To check the exact amount of stamp duty you will pay, click here for the HMRC Stamp Duty Land Tax Calculator.