Stamp Duty, or Stamp Duty Land Tax to give it its full name, must be paid when you buy a property or land over a certain price in England and Northern Ireland.
In July, Chancellor Rishi Sunak temporarily raised the stamp duty threshold for residential properties from £125,000 to £500,000 in an effort to boost the wider economy by giving the housing market a shot in the arm.
This means that for most buyers, properties up to the value of £500,000 currently attract no stamp duty liability – and won’t until end of June 2021, when the threshold reverts back to £125,000.
If you’ve never owned a property before…
As a first-time buyer, you’ll still qualify for stamp duty relief when the rates change at the end of June. So, it doesn’t matter if you plan to live in the property or rent it out; you’ll enjoy the same rates as any other first-time buyer.
For clarity, the first-time buyer stamp duty rates until 1st April 2021 are as follows:
|
Up to £500,000 |
zero |
|
The portion from £500,001 to £925,000 |
5% |
|
The portion from £925,001to £1.5m |
10% |
|
The portion above £1.5m |
12% |
After 1st April 2021, when the threshold for most buyers reverts to £125,000, first time buyers still benefit from a much higher threshold. For clarity, the rates are as follows:
|
Up to £300,000 |
zero |
|
The portion from £300,001 to £500,000 |
5% |
If the price is over £500,000, the stamp duty rules are the same as for people who’ve bought a home before.
If you’re already a homeowner…
If you already own a home and are buying another, either as a buy-to-let investment property or second home, you will still benefit from the stamp duty holiday in terms of threshold.
However, you will have to pay a 3% surcharge on any purchase over £40,000, even if it is your first buy-to-let property.
The stamp duty rates until 1st April 2021 on second homes are therefore as follows:
|
Up to £500,000 |
3% |
|
The portion from £500,001 to £925,000 |
8% |
|
The portion from £925,001 to £1.5m |
13% |
|
The portion above £1.5m |
15% |
The stamp duty rates from 1st April 2021 on second homes are as follows:
|
Up to £125,000 |
3% |
|
The portion from £125,001 to £250,000 |
5% |
|
The portion from £250,001 to £925,000 |
8% |
|
The portion from £925,001 to £1.5m |
13% |
|
The portion above £1.5m |
15% |
Any search engine will quickly take you to a stamp duty calculator, where you can easily enter your details and find out exactly how much tax you would have to pay on the type of property you are interested in buying. It’s really straightforward.
Look before you leap
In most cases, stamp duty will not be the overriding concern when considering a property.
Even in these uncertain times, property remains a tangible asset and an attractive purchase to invest in, especially given the historically strong and resilient UK property market.
So, don’t be licked by stamp duty. Do your sums - and go in with your eyes wide open.
