How does the new Stamp Duty holiday work?
Stamp Duty Land Tax has been a popular talking point following the chancellor’s announcement of a temporary holiday on stamp duty on the first £500,000 of all property sales in England and Northern Ireland.
We have until March 2021 to take advantage of this holiday with can potentially save homebuyers £1,000’s. The holiday is in an effort to boost the property market and help buyers struggling because of the coronavirus crisis.
What has changed?
The government has temporarily increased the stamp duty threshold to £500,000 for property sales in England and Northern Ireland, until 31 March 2021,
Anyone completing on a main residence costing up to £500,000 between 8 July and 31 March will not pay any stamp duty, and more expensive properties will only be taxed on their value above that amount.
This will save buyers as much as £15,000, if they are buying a property of £500,000 or more.
The average stamp duty bill will fall by £4,500, Chancellor Rishi Sunak has suggested, with nearly nine out of 10 people buying a main home this year paying no stamp duty at all.
How much stamp duty will you pay now?
If the property purchased is your main home you won’t pay any stamp duty on it at all if it costs £500,000 or less.
The next portion of the property’s price (£500,001 to £925,000) will be taxed at 5%, and the £575,000 after that (£925,001 to £1.5 million) will be taxed at 10%
The remaining amount (over £1.5 million) will be taxed at 12%. You can calculate how much you are liable to pay here.
Before the announcement, stamp duty in England and Northern Ireland was paid on land or property sold for £125,000 or more, while first-time buyers did not pay any stamp duty up to £300,000. But this stamp duty holiday replaces the first-time buyer discount.
Landlords and second home buyers are also eligible for the tax cut but will still have to pay the extra 3% of stamp duty they were charged under the previous rules.
Image source: https://www.bbc.co.uk/news/business-53319433
Can I still benefit if I’ve already completed a purchase?
The holiday applies from 8 July, which means anyone completing a property purchase before that date will have to pay the full normal stamp duty.
Stamp duty is payable upon completion, so if you’ve exchanged contracts and are currently waiting for completion you will be able to benefit from the change.
If you are looking to purchase a new property your first port of call should be to speak with a Mortgage Adviser. They can discuss the above in detail and can complete affordability calculations to see how much you can borrow.
To speak with Sentry Mortgage Adviser call 03442 643 575 or email: firstname.lastname@example.org
The blog postings on this site solely reflect the personal views of the authors and do not necessarily represent the views, positions, strategies or opinions of Sentry Advice Limited. All comments are made in good faith, and neither Sentry Advice Limited nor the author will accept liability for them. No advice is given in any posting. Please contact your adviser for more information or advice.