The chancellor, Rishi Sunak, has announced that from 15th of July 2020 until 31st of March 2021, there will be no stamp duty to pay on property purchases up to £500,000.
What is Stamp Duty and how much would you normally pay?
You must pay Stamp Duty Land Tax (SDLT) if you buy a property or land over a certain price in England and Northern Ireland. Previously, you would have paid stamp duty on homes sold for at least £125,000, or if you were a first-time buyer, on properties sold for more than £300,000.
What is changing now?
If you purchase a residential property between 8 July 2020 to 31 March 2021, you only start to pay SDLT on the amount that you pay for the property above £500,000. These rates apply whether you are buying your first home or have owned property before.
The special rules for first time buyers are replaced by the reduced rates set out below.
You can use the table to work out the SDLT due:
The change will also apply to second homes and additional properties. They currently attract a 3% surcharge, and this will still be in place, but for landlords, buying a property will now be cheaper.
The following rates apply:
How much will you save?
If you are a buyer moving to an £800,0000 home, you will see the stamp duty bill reduced in half, while someone paying £5m will get a reduction of less than 3%.
If you are a first-time buyer spending £495,000 on a property, you will not pay any tax now and save £9,750. A mover spending the same amount would save £14,750.
At a price of £600,000 for a home, you will pay 5% on the portion above £500,000. Your bill will be £5,000, which is £15,000 less than under the old rules.
An investor paying £250,000 on a property will save £2,500, while one spending £495,000 will save £14,750.
If you are looking to purchase an additional rental property, or are looking to sell, please contact us today for a discussion on the best options for your investment.
For further information, please check the official Government guidelines, which can be found here:
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Source: UK Government, 2020