What is stamp duty?
Stamp duty, or Stamp Duty Land Tax (SDLT) as its officially known, is a fee payable to HMRC if you buy a property or land over a certain price in England and Northern Ireland.
What is the Stamp Duty holiday?
Starting on 8 July 2020 and extending until 31 March 2021 the Stamp duty holiday removes the need to pay stamp duty on the first £500,000 of a main residential property purchase.
More expensive properties will only incur stamp duty on the amount above £500,000, with different rates for different ‘slices’ of property value: 5% of the value between £500,001 to £925,000, 10% of the value from £925,001 to £1.5million and 12% over £1.5 million.
Who benefits from the change?
First time buyers were already exempt from paying stamp duty on the first £300,000 of a property purchase (as long as the total price didn’t exceed £500,000), and only paid tax on anything between £300,000 and £500,000. They will now benefit from a complete exemption if their first purchase costs £500,000 or less. If it costs over £500,000 they’ll pay the same stamp duty as everyone else.
Home movers buying a new property for more than £125,000, the previous threshold for paying duty on a main residential property, will benefit to a greater degree than first time buyers. Anyone buying a property with a purchase price of up to £500,000 won’t pay any tax at all during the holiday, meaning savings of up to £15,000.
What about second homes or buy to let properties?
Whilst investors in buy to let, holiday let and second properties won’t benefit from the complete exemption for main residences, they will benefit from a stamp duty reduction. Second homes, buy to let and holiday let owners will continue to be charged standard stamp duty rates plus 3% for properties costing £40,000 or more.
This means they’ll now only pay a flat 3% on the first £500,000, rather than 3% on the first £125,000, 5% on the slice above that (£125,001-£250,000), and 8% above that (from £250,001 to £925,000). As with residential homes, the rates on investment properties continue to increase in ‘slices’, with a maximum of 15% payable on the value of a purchase over £1.5 million.
Stamp duty rates from 8 July 2020 to 31 March 2021
|| Stamp duty payable
|Main residential property
||Additional dwellings (second home/buy to let investment/holiday let investment)
|Up to £500,000
|The next £425,000 (£500,001 - £925,000)
|The following £575,000 (£925,001 - £1.5 million)
|The remaining amount (above £1.5 million)
More details of revised SDLT rates are available on the HMRC website
including a calculator
to help you work out the amount payable on a property you’re planning to purchase.
Buying a new property?
If you’re planning a new property purchase, completing before March 2021 will enable you to benefit from the stamp duty holiday. We offer mortgages to newly qualified teachers, first time buyers, education professionals and those investing in buy to let or holiday let properties. Find out more about our current range of mortgages deals here.