Stamp Duty Holiday

10th July 2020

Stamp Duty Holiday

The Chancellor, speaking at the summer economic update on Wednesday 8th July 2020, announced that with immediate effect the stamp duty threshold will be temporarily raised from £125,000 to £500,000, and will run until 31 March 2021.

So, what is stamp duty?
Stamp duty is paid when buying a home, or piece of land, worth £125,000 or more in England and Northern Ireland. It is charged on a tiered basis, so you only pay the higher rates on the slice above any threshold.

The rates were as follows;
  • Up to £125,000: 0%
  • On the portion from £125,001 to £250,000: 2%
  • On the portion from £250,001 to £925,000: 5%
  • On the portion from £925,000 to £1.5m: 10%
  • Above £1.5m: 12%
There are exemptions available for first-time buyers, they don’t have to pay stamp duty on the first £300,000, so long as the home doesn’t cost more than £500,000.
Those buying additional property, for £40,000 or more, such as second homes, pay an extra 3% of stamp duty (on top of regular stamp duty rates) and applies to the entire purchase price of the property.

What will happen now?
The new measure means that buyers will only start to pay stamp duty on property above £500,000.

The new holiday rates are as follows:
  • Up to £500,000: 0%
  • On the portion from £500,001 to £925,000: 5%
  • On the portion from £925,001 to £1.5m: 10%
  • Above £1.5m: 12%

For those buying an addition home, the 3% stamp duty surcharge will still apply, on top of the new holiday rates, so people buying additional homes will attract a 3% stamp duty bill on the first £500,000 of property. 

To find out how this would affect your purchase, be it your first purchase, an onward move or a second home, we recommend this hand calculator.

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