Stamp Duty 2021 F4

Movers to save thousands as Stamp Duty holiday extended

How much could you save?

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.

House price Stamp duty rate previously Stamp duty rate until 30th June Stamp duty rate from 1st July - 30th September
Up to £125,000 0% 0% 0%
£125,001 - £250,000 2% 0% 0%
£250,001 - £925,000 5% 0% up to £500,000. 5% between £500,001 - £925,000  5%
£925,001 - £1,500,000  10% 10% 10%
>£1,500,001 12% 12% 12%

House price example

Stamp duty previously

Stamp duty up to 30th June

Stamp duty 1st July - 30th September

£125,000 £0 £0 £0
£250,000 £2,500 £0 £0
£350,000 £7,500 £0 £5,000
 £500,000  £15,000 £0 £12,500
£925,000 £36,250 £21,250 £33,750

Why is the Stamp Duty holiday a fantastic opportunity for sellers?

There is greater demand in the market. Buyers are rushing to make the most of this tax break and, because they are already saving thousands in tax costs, you are more likely to achieve a better price for your property. Equally, when you come to purchase a new main home, you would usually have paid a higher level of Stamp Duty as you’re not a first-time buyer. However, under these new tax changes, you could find yourself saving a tidy lump sum. 

I am a landlord - can I benefit from the Stamp Duty holiday?

Absolutely. This is a great opportunity for landlords and those of you purchasing a second or additional property. Where previously there would have been a higher buying tax rate and an additional 3% tax fee, now anyone looking to purchase will only have to pay 3% up to £500,000. For this reason, buying a property whilst these tax cuts are in place is a great option for landlords and those looking for a second home.

Our advice to buyers:

Toby Phillips, Managing Director at Countrywide, with over 30 years experience in the industry, gave us his take on the Stamp Duty holiday extension:

The extension will come as a significant relief to people who were stuck in the middle of the buying and selling process. If you’re looking to buy, you need to act quickly. Those of you with purchases over £250,000 may find that time is too tight to complete before the end of June. If your purchase is below £250,000 then you effectively have 6 months to make the most of this tax break. Timing is everything. This really is a fantastic opportunity to purchase if you act now.’ 

It really is a great time to get moving...safely. We want to reassure you that we are taking all the safety precautions necessary and following the latest government guidance so that everyone can continue to move safely throughout 2021.

If you’d like to know more about the stamp duty holiday, contact us today to speak to one of our local property experts.