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Stamp Duty: one week on. What do we now know?

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:

https://www.tax.service.gov.uk/calculate-stamp-duty-land-tax/#/intro

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.

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