What is Stamp Duty?
SDLT is a tax on property purchases. The name of the tax and its rate depends on location. In England and Northern Ireland buyers pay Stamp Duty Land Tax.
In Scotland, the tax is called the Land and Buildings Transaction Tax, while in Wales purchasers pay Land Transaction Tax.
The amount of tax paid depends on where you are in the UK, and the price of the property.
How does the Stamp Duty holiday work?
Until 31st March 2020, the SDLT threshold has increased to £500,000. This means that no tax will be paid up to this amount. For example, if you purchase a property for £495,000 before the expiry date, you will not pay a penny in Stamp Duty.
Properties sold for above £500,000 will only accrue SDLT on the amount over £500,000.
Purchasers of property valued above £500,000 could save as much as £15,000 under the tax holiday.
Below is a table from HMRC detailing SDLT paid under the holiday scheme.
How much is the stamp duty?
Eg individual or couple buying freehold home
Note: Applies to residential properties bought 8 July 2020 - 31st March 2021 in England and Northern Ireland Source: HRMC
The average stamp duty bill will reduce by £4,500, and the Chancellor has indicated that 90% of purchasers will not pay any SDLT at all.
Will those buying a second home or a buy-to-let benefit?
If you are purchasing a second home or buy-to-let, you will benefit from the £500,000 SDLT holiday; however, you will still have to pay the second home surcharge. For properties valued at £500,000 or under, the surcharge is 3%. Homes valued between £500,000 and £925,000 incur a surcharge of 8%, between £925,000 and £1.5m it’s 13% and over £1.5m the surcharge is 15%.
Is it working?
According to latest figures – yes. The latest Halifax House Price Index shows that the average price of a home was £241,604 in July, 1.7% higher than June's £237,834. Furthermore, prices are 3.8% higher than July 2019.
Buyers, sellers, and estate agents alike are benefiting from the stamp duty holiday. After four months of complete stagnation, the property market is moving at a good pace and, helping the economy recover from the first global pandemic in over 100 years.
Guillaumes LLP Solicitors is a full-service law firm based in Weybridge, Surrey. We have a highly experienced property law team who can assist you with all conveyancing matters. To make an appointment, please call us on 01932 840 111