Last week, Chancellor Rishi Sunak announced that with immediate effect, house buyers will pay NO stamp duty on property purchases of up to £500,000, the previous threshold being £125,000. The government hopes that the holiday will kick-start the housing market again, following lockdown seeing a fall in house prices for the first time in eight years
The announcement has however thrown up questions:
When does this take effect from?
The changes took effect immediately following the announcement, for any purchases completing on or after 8 July 2020 and will remain in place until March 31, 2021
What will I pay if the property I am purchasing is over £500,000?
The next portion of the property’s price (£500,001 to £925,000) will be taxed at 5%, and the £575,000 after that (£925,001 to £1.5 million) will be taxed at 10%
How will this affect me as a first time buyer?
First-time buyers are already exempt from stamp duty on property worth up to £300,000.
They are then charged at a rate of 5%on the portion of the value of the property between £300,000 but less than £500,000.
The changes will only affect those who are buying a property worth more than £300,000 as they will no longer have to pay the tax on the portion that’s worth up to £500,000.
If a first-time buyer purchases a property for £500,000 ahead of March 31, they’ll save £10,000 in stamp duty costs.
How does this affect those buying a second property, or those purchasing in a Company name?
The 3 per cent levy paid if you already own a home and are buying an additional property worth more than £40,000 still applies, although you will still pay less than you would due to the raised threshold.
This is the same for those buying in a Company name.
If you are buying an additional property but are replacing your main residence, then your Stamp Duty will be calculated using the ‘normal’ rules – with there being no Stamp Duty up to £500,000.
How do I work out what Stamp Duty I will pay?
The Government has created an online Stamp Duty calculator for ease which you have find at:
Alternatively, contact your Conveyancer who should be aware of the updates and be able to work the Stamp Duty out for you and advice you of your potential savings.