Confused about the new Stamp Duty holiday announcement? Check out our simplified 2 minute guide!
What is Stamp Duty?
Stamp duty is simply a tax paid by people buying properties. The amount of tax is based upon the purchase price of the property. In England and Northern Ireland buyers pay Stamp Duty, and there there are different schemes for Scotland and Wales.
The amount of tax you pay depends on the purchase price of the property and whether you are buying it as your main home, or an additional property, buy-to-let etc.
The Chancellor Rishi Sunak announced changes to Stamp Duty on 8th July meaning any buyer purchasing a primary residential property will pay no stamp duty on the first £500,000. This means the most property buyers will benefit from some whopping savings!
So, getting down to the nitty gritty of it: on a property purchase over the £500,000 threshold, buyers will pay a 5% Stamp Duty but only on the portion from £500,001 to £925,000. Then it’s 10% on the portion from £925,001 to £1.5 million and 12% on any portion over £1.5 million.
If you are buying your main home for £500,000 you would have paid £15,000 in Stamp Duty. Now you pay nothing.
If you are buying your main home for £750,000 you would have paid £27,500. Now you pay £12,500.
There’s been a lot of confusion about purchasing a second home but we can confirm that there are large savings to be made here too. The higher additional rates remain, with a 3% higher rate on top of the new revised rates.
So, if you are purchasing a holiday home up to the threshold value of £500,000, you will pay 3% Stamp Duty. If it’s over the threshold of £500,000 you’ll pay 8% on the portion from £500,001 to £925,000, 13% on the portion from £925,001 to £1.5 million, and 15% on the remaining portion over £1.5 million.
Why have the Government made these changes?
This move by the Government will keep the post lock-down property market momentum going strong and help the broader economy.
This is because when people move, they often spend thousands of pounds doing up their new home to suit their lifestyle and tastes. Think about it: when you move home, you often spend money on new carpets, curtains, kitchen units, and even new furnishings etc.
So when does all this end?
From 1 April 2021, the Stamp Duty holiday ends and the old regulations will revert to what they were before these temporary changes were announced, unless the Government decide otherwise, of course. We can live in hope!
Our thoughts on it all
The change means now is a great time to put your property on the market as we’re expecting a surge of buyers looking to make their move while they can save a large chunk of hard earned cash.
We’re primed and ready to take your calls and answer any questions you have around the new Stamp Duty changes. So, if you are thinking of buying or selling in 2020 the time’s never been better thanks to this news!