What is stamp duty, how has it changed and how will it affect you?
14th July 2020
14th July 2020
Stamp duty is a tax paid by people buying properties, although it varies slightly across the UK. In England and Northern Ireland “Stamp Duty Land Tax” is paid by the buyer. In Scotland this is known as “Land and Buildings Transaction Tax” and “Land Transaction Tax” in Wales. The amount handed to the government depends on where you are in the UK, and the price of the property.
The recent changes to stamp duty will only apply to buyers within England and Northern Ireland. The government has temporarily increased the stamp duty threshold to £500,000 for property sales in England and Northern Ireland. Anyone completing on a main residence costing up to £500,000 between 8 July and 31 March will not be required to 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 the property being purchased is £500,000 or more. The move is aimed at helping buyers who have taken a financial hit because of the coronavirus crisis.
Chancellor Rishi Sunak has suggested that the average stamp duty bill will fall by £4,500, with nearly nine out of 10 people buying a main home this year paying no stamp duty at all (on properties costing £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%.
Previously stamp duty in England and Northern Ireland was paid on land or property sold for £125,000 or more (although first time buyers did not pay any stamp duty up to £300,000 and this stamp duty holiday replaces the first time buyer discount). Landlords and second home buyers are eligible for the tax cut but will still have to pay the extra 3% of stamp duty they were charged under the previous rules.
This welcome move by the government is in place until 31 March 2021.