Rishi Sunak’s Stamp Duty Holiday and how it can save you thousands
Jul 08, 2020 | Rebecca Humble
Chancellor Rishi Sunak has today introduced a “Stamp Duty Holiday” by announcing that Stamp Duty Land Tax (SDLT), also commonly known as stamp duty, is to be axed for six months on homes worth up to £500,000.
The decision is effective immediately and forms part of the government’s emergency mini-budget, aimed to combat the potential financial crisis caused as a result of the coronavirus pandemic.
Historically, stamp duty was charged at 2% on properties sold for a price above £125,000, increasing to 5% for properties over £250,000. The removal of this will see the average stamp duty bill fall by £4,500 and almost 9 out of 10 people buying a home before 31 March 2021 will pay no stamp duty at all.
If you are looking to purchase or sell a property, given the introduction of the “stamp duty holiday” it is advisable to obtain independent legal advice from an appropriately experienced solicitor before taking any action. If you would like legal advice or assistance with buying or selling a property or have any questions regarding your position in relation to stamp duty please call us on 0800 086 2929, email email@example.com or complete our Free Online Enquiry Form.
What is stamp duty?
Stamp duty is a government tax applied to both freehold and leasehold residential property or piece of land costing more than £125,000, or £300,000 for first time buyers. Different rates apply for non residential property.
The tax applies whether you are buying outright or with a mortgage.
Before the stamp duty holiday, 2% was payable on homes sold for £125,001 – £250,000, 5% on homes sold for £250,001 – £925,000, 10% on homes sold for £925,001 – £1.5m and 12% on homes above £1.5m
Am I eligible for a stamp duty tax break?
The changes to stamp duty are applicable to buyers in England and Northern Ireland.
In order to qualify, the purchase has to be completed from 8 July 2020 and before 31 March 2021.
When will the stamp duty holiday start?
The break is effective immediately, starting 8 July 2020.
This means that any property sale which has not completed before 8 July will be eligible.
I have just bought a home, will I qualify?
Any property sale completed before 8 July 2020 does not qualify for the break and home buyers will be liable for the full sums applicable before the temporary cut.
How long will the stamp duty holiday last?
The Chancellor has confirmed that the break will last until 31 March 2021.
How will the stamp duty holiday work?
The tax will not be payable on any residential property or land sold for less than £500,000. Any property sold for over £500,000 will be subject to the following rates:
5% on £500,001 – £925,000
10% on £925,001 – £1.5 million
12% on £1.5 million and over
How much can I save if I buy during the stamp duty holiday?
Buyers will make a significant tax saving, averaging £4,500 per sale, with the majority of people paying nothing at all.
The higher the sale price, the more the buyer will save. By way of example, before the stamp duty holiday, if you had bought a house for £280,000, you would have paid stamp duty in the sum of £4,000.
This is calculated on the basis of 0% tax on the first £125,000, 2% tax on the next £125,000 (£2,500) and 5% tax on the remaining £30,000 (£1,500).
I am a first time buyer – what does this mean for me?
Before the stamp duty holiday, first time buyers benefited from a higher threshold of 0% stamp duty on the first £300,000.
With a raised lower limit of £500,000, first time buyers are now granted a further £200,000 in tax relief.
I am buying an additional property – what does this mean for me?
Buyers purchasing second homes or buy-to-let properties will also benefit from the exemption, but will continue to pay the additional 3% levied on the entire purchase price.
I am looking to sell my property – what does this mean for me?
The tax break should come as welcome news to sellers as the government shows confidence in the property market.
The savings to home buyers is sure to promote property sales throughout the country.
As the break has been implemented with immediate effect, we should not see any delays with property transactions presently in motion.
What will be the impact of the stamp duty holiday on the property market?
The average stamp duty bill will fall by £4,500 and 9 out of 10 people buying a home will pay no stamp duty at all.
The chancellor aims to renew confidence in the property market, to prevent prices falling and to ward off potential unemployment.
How Elite Law Solicitors can help
It is clear that property buyers could now save thousands of pounds thanks to the new tax break introduced by the Chancellor in a bid to reinvigorate the housing market following the coronavirus lockdown.
This move will undoubtedly serve to boost the economy in the coming months and those looking to purchase or sell a home will no doubt be keen to find out how they will be impacted and how they may benefit.
If you are considering buying or selling a property, contacting a solicitor at an early juncture is advisable so that you are appropriately advised at the outset of any key considerations in relation to stamp duty.
Make A Free Enquiry
If you are considering buying or selling a home or have any queries relating to any of the issues discussed in this article, please get in touch with Shakeel by calling 0800 086 2929, emailing firstname.lastname@example.org or completing our Free Online Enquiry Form.
The content of this article is for general information only. The information in this article is not legal or professional advice. If you require legal or professional advice you should obtain independent expert advice from qualified property solicitors such as those within our firm.