Stamp Duty Holiday

The chancellor Rishi Sunak has announced a stamp duty holiday as part of a measure of proposals in the summer budget to stimulate the economy.

Anyone buying a home will benefit immediately from the proposals which are expected to cost the Treasury around £3.8 billion.

The tax cut will be temporary and will run until 31 March 2021.

These changes could save buyers up to £15,000 if they are buying a property as your main home of £500,000 or more.

There is no stamp duty payable on homes up to £500,000.

What is stamp duty?

This is a tax paid when you purchase a property (Stamp Duty Land Tax) in England and Northern Ireland.

The amount of tax varies with the purchase price.

What are the rates of tax?

There is no stamp duty payable for the first £125,000

If you are a first-time buyer the threshold is increased to £300,000.

From £125,001 to £250,000 the rate is 2%.

From £250,001 to £925,000 the rate is 5%.

From £925,001 to £1,500,000 the rate is 10%.

For properties over £1,500,001 the rate is 12%

When is this payable?

The obligation to pay stamp duty arises on legal completion and the tax must be paid within 14 days.

Anyone completing a sale before 8 July 2020 will have to pay stamp duty at the normal rate without any concession.

Therefore, if you have exchanged contracts before 8 July but are waiting for completion you will still be able to benefit from the stamp duty holiday.

Examples of savings

  1. Buying a home for £125,000

There is no change since stamp duty would not have been payable anyway.

  • Buying a home for £300,000 – first time buyer

There is no change as a first-time buyer paid no stamp duty under £300,000 under the old rules.

  • Buying a home for £300,000 – moving up the property ladder

Under the old rules you would have paid stamp duty of £5,000

Under the tax holiday there is no stamp duty payable.

Saving = £5,000

  • Buying a home for £400,000 – first time buyer

Under the old rules you would have paid stamp duty of £5,000

Under the stamp duty holiday there is no stamp duty payable.

Saving £5,000

  • Buying a house for £400,000 – moving up the property ladder

Under the old rules you would have paid stamp duty of £10,000.

Under the stamp duty holiday you pay no stamp duty.

Saving £10,000

  • Buying a house for £500,000 -moving up the property ladder

Under the old rules you would have paid £15,000.

Under the stamp duty holiday you pay no stamp duty.

Saving = £15,000

  • Buying a house for £600,000 – moving up the property ladder

Under the old rules you would have paid £20,000.

Under the stamp duty holiday you pay £5,000.

Saving = £15,000

  • Buying a house for £1,000,000

Under the old rules you would have paid £43,750.

Under the stamp duty holiday you pay £28,750.

Saving = £15,000

  • Second home purchases

A second home purchase is also eligible for the tax holiday but there is an additional levy of 3% charged (the same as under the old rules).

Therefore, if you buy a second home for £300,000 you just pay the 3% levy of £9,000.

If you would like to discuss a sale or purchase of property, or wish to discuss the stamp duty savings, please contact Amanda Edwards or Sophie Mortimer in our residential conveyancing department on 01827 311411 or use the email contact enquiry form https://www.rutherfordslegal.com/property/

Contact us on: 01827 311 411 or [email protected]