Chancellor Rishi Sunak has today announced a holiday on stamp duty on the first £500,000 of property purchases in England and Northern Ireland until March 2021.
The announcement comes as part of a package of measures announced today to kickstart the economy and boost the property market.
Rishi Sunak said the stamp duty holiday would benefit nine in ten homebuyers – saving £4,500 on the average purchase.
What is stamp duty?
Stamp Duty Land Tax is paid to HMRC and the tax is charged at increasing rates for each portion of the price. You must pay Stamp Duty Land Tax (SDLT) if you buy a property or land over a certain price in England and Northern Ireland. There are different rules if you’re buying your first home and for additional residential properties.
You can calculate the amount you will need to pay by using the HMRC calculator.
The tax is different if the property or land is in:
- Scotland – pay Land and Buildings Transaction Tax
- Wales – pay Land Transaction Tax if the sale was completed on or after 1 April 2018
The changes to stamp duty will only apply to buyers in England and Northern Ireland.
When do I pay stamp duty?
The current stamp duty threshold is £125,000 for residential properties and current stamp duty rates are 2% on £125,001-£250,000, 5% on £250,001-£925,000, 10% on £925,001-£1.5m, and 12% on any value above £1.5m. However, under the new rules announced today the threshold will be raised to £500,000.
This means any property purchases below the new threshold will not need to pay stamp duty as long as the transaction is completed before 31 March 2021.
The stamp duty 3% surcharge will still apply to those buying additional property worth more than £40,000.
If you need to pay SDLT on your purchase you must send an SDLT return to HMRC and pay the tax within 14 days of completion. Your solicitor will usually file this on your behalf.
When will the stamp duty holiday begin?
The changes come into effect immediately and will last until 31 March next year.
This means anyone completing a property purchase before today will have to pay the full stamp duty as per the usual rules.