On the 8th July 2020, as part of his plan to boost the economy and property market, the Chancellor, Rishi Sunak, announced an immediate temporary holiday on stamp duty on the first £500,000 of all property sales in England and Northern Ireland, until 31st March 2021.
The removal of the payment of stamp duty on property up to £500,000 will save purchasers up to a maximum of £15,000.
Stamp duty in England and Northern Ireland is the % of tax paid by people when they purchase a property. There are different rates depending on the value of the purchase:
Property or lease premium or transfer value Stamp duty rate
Up to £125,000 Zero
The next £125,000 (the portion from £125,001 to £250,000) 2%
The next £675,000 (the portion from £250,001 to £925,000) 5%
The next £575,000 (the portion from £925,001 to £1.5 million) 10%
The remaining amount (the portion above £1.5 million) 12%
*First time buyers do not pay stamp duty up to £300,000.
The housing market
The housing market, as with the rest of the economy, has been hit hard by the Coronavirus pandemic. The lockdown in March meant that the sale of many houses just stopped and interest paused. Sales in 2020 are at half the levels of 2019:
Why have the government introduced this?
This temporary holiday on Stamp duty is aimed at helping buyers who have been hit financially by the pandemic. It also hopes to boost the property market in a bid to stop house prices falling any further.
The tax the government receive on property purchases accounts for c2% of the treasury’s funds. In 2018/19 they received nearly £12billion*.
Who is affected by this change?
Anyone completing on a main residence costing up to £500,000 until the 31st March will not pay any stamp duty, and more expensive properties will only be taxed on their value above that amount.
This change applies to all purchasers from first time buyers to investors and second home purchases. Landlords and second home buyers will still have to pay the extra 3% of stamp duty they were charged under the previous second property rules.
Tax rules can change and depend on your own particular circumstances. The Financial Conduct Authority does not regulate Tax advice.
If you would like to discuss what difference this could make to your position, then please get in touch.
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