When purchasing a property in England and Northern Ireland, buyers usually have to factor in the cost of Stamp Duty Land Tax. However, the government recently announced a Stamp Duty Holiday, where this will be reduced until 31 March 2021 in a bid to help the economy recover from the recent pandemic.
Stamp Duty is a form of tax payable when purchasing a property that is over a certain value. It applies to both freehold and leasehold properties, as well as cash buyers and those with mortgages. The amount of tax varies depending on a variety of different factors. This includes the value of the property, whether it’s residential or non-residential, and your own position on the property ladder.
The stamp duty threshold for purchasing a residential property is £125,000. There are currently some exemptions for first time buyers. Your return must be sent within 14 days of completion, although your solicitor will typically file this return on your behalf.
However, until 31st March 2021, buyers will no longer be required to pay stamp duty on properties less than £500,000. Anything over this threshold up to £925,000 will be taxed at 5%, and anything between £925,001 to £1.5 million will be taxed at 10%.
Since stamp duty is due after completion, if you already exchanged contracts before the announcement was made on July 8th but still have yet to complete, you will also benefit from the stamp duty holiday.
This only applies to your main property though, so if you’re a landlord or looking to buy a second home, you will still be required to pay the 3% additional homes surcharge that normally applies. It’s also worth noting that if you intend to sell your previous home but then face delays, ending up with two properties in your name at once during the holiday period, you will also be required to pay the 3% rate. Should this happen, then you will be able to apply for a stamp duty refund if you sell your first property within 3 years.
The stamp duty holiday has been designed to help potential buyers who have been affected by the recent pandemic and encourage movement within the property market. Although the properties of a higher value will still be subject to tax, the government have suggested that on average, the cost of stamp duty will be reduced by around £4,500, with up to £15,000 saved on properties valued at over £500,000.
If you have any questions about these recent changes or want to take advantage of the stamp duty holiday, then feel free to contact Fodens today. Our friendly team are always on hand to help, and we will do everything we can to help you navigate your way through the changes we face together.
Share this post
Back to all