Stamp Duty: Everything you need to know about the cut
Good news! Homebuyers will now pay zero Stamp Duty on the first £500,000 of any property purchase.
The changes were announced by the Government yesterday (8 July) and are effective immediately.
Previously, if you were buying a home priced at £450,000 with a Stamp Duty rate of 2.7% you would be liable to pay an extra £12,500. Now, that cost is slashed to zero.
See the table below to find out how this affects you:
Property value | Rate of Stamp Duty |
Up to £500,000 | Zero |
The next £425,000 (the portion from £500,001 to £925,000) | 5% |
The next £575,000 (the portion from £925,001 to £1.5 million) | 10% |
The remaining amount (the portion above £1.5 million) | 12% |
>> Table courtesy of Capricorn Financial Consultancy in Hammersmith
The Stamp Duty threshold was increased from £125,000 to £500,000 to help boost the economy during the Covid-19 outbreak. The higher limit will expire on March 2021.
There’s no change for first-time buyers, as Stamp Duty had already been slashed to 0% for properties up to £500,000 in London.
What is Stamp duty?
‘Stamp Duty’ is a levy payed to the Government by homebuyers when they buy a home. It’s based on the final purchase price – but the amount of Stamp Duty you pay varies depending on where you are buying in the UK.
Previously in England and Northern Ireland, this tax is only paid on properties costing more that £125,000 and starts at 2%, increasing to 15% for properties over £1.5million.
Stamp Duty must be paid within 14 days of a completed sale.
What does the new announcement mean for buyers?
With 0% to be paid on ‘main home’ properties under £500,000 it means that approximately 90% of people in the England and Northern Ireland buying a home this year will pay no Stamp Duty at all.
The average Stamp Duty bill will fall by £4,500, with potential savings for homeowners reaching £15,000.
Potential buyers that may have been reluctant to buy for fear of market changes and economic uncertainty, could now be incentivised by this saving to take advantage and buy before March 2021.
However, for those buying a second home, the stamp duty rates remain the same. See the table below:
Property value | Rate of Stamp Duty |
Up to £500,000 | 3% |
The next £425,000 (the portion from £500,001 to £925,000) | 8% |
The next £575,000 (the portion from £925,001 to £1.5 million) | 13% |
The remaining amount (the portion above £1.5 million) | 15% |
>> Table courtesy of Capricorn Financial Consultancy in Hammersmith
It’s hoped that this temporary tax holiday will give buyers the confidence they need to buy and give the housing market a much-needed boost in a time of great uncertainty.
What could the new stamp duty holiday mean for you? If you’re considering buying or selling, speak to a member of our experienced Sales team on 020 8819 0510 or email sales@hortonandgarton.co.uk.
We would be delighted to answer any queries you may have.
