Government introduce stamp duty land tax holiday to boost the property market
As of 8 July 2020, the rates of stamp duty land tax payable on residential house purchases have changed, representing a welcome saving for house buyers. Stamp duty land tax, or SDLT, is payable following completion of a purchase of property in England and Northern Ireland and the amount you pay is based on the price you paid for the property.
For purchases completing between 8th July 2020 and 31st March 2021, a buyer of property up to a value of £500,000 will pay no stamp duty land tax. Over this amount, the rates are stepped as follows:
- From £500,000 to £925,000 - 5%
- From £925,000 to £1,500,000 - 10%
- Above £1,500,000 - 12%
For an example of the savings available: a property purchase of £350,000 completing before 8 July, would have resulted in an SDLT liability of £7,500 (0% for the first £125,000 of purchase price, 3% for the next £125,000 and 5% for the remaining amount).
For a completion after 8 July, the SDLT payable will now be nothing as the entire £350,000 purchase price will be charged at 0%.
Second Homes and Investment Properties
It should be noted that the higher rate of stamp duty land tax will still apply for buyers of second homes or subsequent residential properties. The higher rate is an extra 3% payable on top of the standard rate of stamp duty land tax - this applies if you own any other residential property, anywhere in the world.
However, the additional 3% rate will now be added to the new residential rates so that the first £500,000 will be charged at 3%, rising then to 8%, 13% and 15% based on the above price bands. This can still represent a tax saving for buyers.
An example of the savings that second home buyers can benefit from can be seen again with a purchase price of £350,000. Before 8th July, the SDLT payable would have been charged as follows: 3% on the first £125,000 of purchase price, 5% on the next £125,000 and then 8% on the remainder – a total of £18,000. After 8th July, the tax would be 3% of the entire purchase price, resulting in a tax bill of £10,500, a saving again of £7,500 in tax.
Buying a Property Now?
It is clear that now could be a great time to think about buying that new home you’ve been thinking about and with these tax savings, your money could go a lot further. A boost in the market encouraging more buyers to make offers is also good news for sellers.
How Can We Help?
If you are planning a house move or have a property on the market and are looking for an experienced conveyancer and a personal service, then contact Samuels to find out how we can assist you.
We have decades of experience helping buyers and sellers from all over the country, with a friendly and efficient team. We are happy to provide free quotes for our services.