Thousands of homebuyers rejoice as Chancellor Rishi Sunak announces an extension to the Stamp Duty holiday. Here, we look at how this will affect you and your move.
The Stamp Duty holiday on property purchases has been extended until the end of September, Chancellor Rishi Sunak announced in his Budget. This is fantastic news. It means if you’re looking to buy, you’ll have absolutely no Stamp Duty tax to pay on the first £500,000 of your purchase from now until the end of June and nothing to pay on purchases under £250,000 until the end of September.
This will also come as a relief to those buyers and sellers who were scrambling to get their sale completed in time to meet the previous deadline of 31st March.
What is Stamp Duty?
Stamp Duty Land Tax (SDLT) is the tax that must be paid when you purchase a property. The amount of money required for Stamp Duty depends on the overall price of the property as well as factors like whether it is residential or non-residential and whether or not you are a first-time buyer.
How much would you usually pay in Stamp Duty?
If the property is worth between £125,001 and £250,000, the Stamp Duty land tax rate is 2%. So if the property was valued at £250,000, you would have to pay an extra £2,500 in Stamp Duty tax.
For the next £675,000, the rate is 5%. If the property you were purchasing was valued between £250,001 and £925,000 bracket, you would not pay any Stamp Duty on the first £125,000, but would pay a 2% rate on the next £125,000 and would pay a 5% rate on the following £675,000. So, as you can see, the tax charges add up.
What changes have been made?
Under this new tax extension, there will be absolutely no stamp duty tax on homes up to £500,000. The next portion of the property's price (£500,001 to £925,000) will be taxed at 5%, and the portion after that (£925,001 to £1.5m) at 10%. From 1st July the nil rate band will drop to £250,000, before returning to the original £125,000 band on 1st October.
The news has been welcomed by home buyers who were potentially facing up to a £15,000 tax bill if they failed to meet the original deadline.