The Government has confirmed that a temporary stamp duty holiday will be in place from today (Wednesday 8th July) until 31st March 2021 on the first £500,000 of all residential property sales in England and Northern Ireland.
Chancellor, Rishi Sunak, made the announcement during the Summer Economic Update, along with a number of other financial measures, designed to boost the UK economy which has been severely impacted by the coronavirus pandemic.
What is stamp duty?
When buying a property or a piece land (with or without a mortgage) in England or Northern Ireland, costing more than £125,000 (or over £40,000 for second homes or buy-to-let properties), you have to Stamp Duty Land Tax (SDLT).
SDLT is paid to the Government and applies to both freehold and leasehold property purchases.
How much is SDLT usually?
Ordinarily, SDLT is charged as follows:
- 0% for purchases under £125,000;
- 2% for purchases between £125,001 to £250,000;
- 5% for purchases between £250,001 – £925,000;
- 10% for purchases between £925,001 – £1,500,000; and
- 12% for purchases over £1,500,000.
The rules are different for first-time buyers who are entitled to relief for the first £300,000 of SDLT on properties up to a price of £500,000.
Those purchasing a second home or a buy-to-let property pay an extra 3% of stamp duty on top of the charges referenced above.
How will the temporary stamp duty holiday work?
Under the measures which have been rolled out, homebuyers purchasing a property between 8th July 2020 and 31st March 2021 will only pay SDLT on the amount they purchase a property for above £500,000.
Consequently, SDLT will be calculated as follows:
- 0% for purchases up to £500,000;
- 5% on the next £425,000 of the purchase price (£500,001 to £925,000);
- 10% on the next £575,000 of the purchase price (£925,001 to £1.5 million); and
- 12% of the remaining amount (above £1.5 million).
Those purchasing a second home or a buy-to-let property pay an extra 3% of stamp duty on top of the new rates referenced above. Which will benefit people buying a second property worth more than £125,000.
On 1st April 2021, SDLT will revert back to the standard rates referenced previously in this article.
What about properties brought before 8th July 2020?
Unfortunately, for all property purchases completed before 8th July 2020 the temporary stamp duty holiday charges will not apply.
For further guidance on the stamp duty holiday, please click here.
How we can help
For further information regarding the stamp duty holiday or to discuss your circumstances, please contact one of our conveyancing solicitors in Derby, Leicester and Nottingham on 0800 024 1976 or via our online form.