Homebuyers will not pay stamp duty on properties up to £500k until 31st March 2021

Rishi Sunak announces Stamp Duty holiday

Chancellor Rishi Sunak announced on 8th July 2020 a measure that could save the average homebuyer over £2,000. The last stamp duty holiday was back in 2008, in a bid to lift the market following the financial crisis. In a move costing £600 million, the then-Chancellor Alistair Darling suspended stamp duty for a year on properties worth up to £175,000. It’s a measure of the severity of the current crisis that Johnson’s government is now removing SDLT up to a £500,000 threshold, at an estimated cost of £1.3 billion to the Treasury. The current stamp duty holiday will however be not quite as long, at around nine months, and will end on 31 March 2021.

At the moment, the threshold where you start paying stamp duty in England and Northern Ireland is £125,000, or £300,000 for first-time buyers (if buying a property worth less than £500,000).

If you’re a first-time buyer in England or Northern Ireland buying a property for up to £500,000, you already don’t pay stamp duty on the first £300,000 and pay 5% on any portion between £300,001 and £500,000 (if your property’s worth more, the normal rules apply).

But for now, no one will pay stamp duty when buying a main home worth up to £500,000.

For properties costing more than £500,000, the stamp duty bands are unchanged – however, you will still make a saving of £15,000 on the first £500,000. So if you bought a £600,000 property for example, you’d pay £5,000 stamp duty (5% of the £100,000 above the threshold) – before the changes were announced, you’d have had to pay £20,000.

It’s good news for Landlords buying properties under £500,000 will pay only the 3% additional home surcharge, while those buying for their primary residence will pay no stamp duty.

How much will buyers save?

How much a buyer in England or Northern Ireland could save under the temporary measure will depend on how much the property costs – as a general rule, the more expensive the property, the more you’ll save (up to the maximum of £500,000).

For example, if you buy a property for £400,000 in England and you’re not a first-time buyer, you would usually pay £10,000 (made up of £2,500 on the portion between £125,001 and £250,000, and £7,500 on the portion between £250,001 and £400,000).

But for now, you’d pay no stamp duty on the property at all – saving you £10,000.

The Chancellor has said the average saving will be £4,500.

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Source: money saving expert, open rent