The housing market has been buoyant in recent months thanks to the rush to complete sales before the 1st July when the rate of Stamp Duty changes. However, if you fail to move before that time all is lost as there are still some concessions until the end of September. So, if you are in the market to move here’s what you need to know…
In July 2020 the level at which purchasers had to start paying Stamp Duty changed from £125,000 to £500,000 – this was a short-term arrangement (known as a Stamp Duty holiday) aimed at boosting the lockdown property market.
Stamp Duty is a tax paid on property purchases. You must pay Stamp Duty if you buy a property or land over a certain price in England and Northern Ireland. There are different rules in Scotland (Land and Buildings Transaction Tax) and Wales (Land Transaction Tax).
In England and Northern Ireland you pay the tax when you:
- Buy a freehold property
- Buy a new or existing leasehold
- Buy a property through a shared ownership scheme
- Are transferred land or property in exchange for payment, for example you take on a mortgage or buy a share in a house.
The threshold is the figure where you will be obliged to pay Stamp Duty. If you buy a property for less than the threshold , no Stamp Duty needs to be paid.
The current Stamp Duty threshold for residential properties is £500,000 – but this changes on 1st July 2021.
From 1st July – 30th September 2021
The threshold for residential properties during this period will be £250,000. So, for any properties up to this price there is no Stamp Duty.
From 1st October 2021
The Stamp Duty threshold for residential properties will be £125,000. This threshold is the same as it was before 8th July 2020 when the Stamp Duty holiday began.
So, from 1st October the rates are due to return to normal:
- £0-£125,000 = 0%
- £125,001-£250,000 = 2%
- £250,001-£925,000 = 5%
- £925,001-£1,500,000 = 10%
- £1,500,000+ = 12%
First time buyers
First time buyers will be entitled to a discount from 1 July 2021 which means they will pay less or no tax if both the following apply:
- The buyer/s are first time buyers
- The purchase price is less than £500,000.
The Stamp Duty holiday has meant that some buyers have enjoyed a saving of up to £15,000 when buying homes. Landlords and second-home buyers can also make use of the reduced rates but they still have to pay the extra 3% of stamp duty they were charged under the previous rules.
If you have not already started the moving process you might struggle to complete a purchase before the end of September deadline. However, with some reporting that house prices have soared due to the Stamp Duty holiday some are predicting a slight fall in demand, and maybe therefore prices too. So, if you miss out on the Stamp Duty holiday you never know, you might benefit from lower sale prices.
To find out how much you would pay if you moved, use the government’s Stamp Duty Land Tax Calculator.