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What is the stamp duty holiday?

The government has announced a stamp duty holiday up until March 31, 2021 — and now it's been extended until September. But what does it mean for you – and how much will you have to pay in stamp duty? We’ll talk you through everything you need to know.


The stamp duty holiday

Chancellor Rishi Sunak announced that a stamp duty holiday will be in place from July 8, 2020 until March 31, 2021 — and now that's been extended, tapering off until the end of September. What does that mean? Essentially, this lowers the rate of stamp duty significantly and eliminates it completely on many purchases. 

That means you might not have to pay a penny in tax on your next move. Not only that, but any sales that are currently in progress should be eligible for the benefit. 

We’ll get more into the details of how much stamp duty costs in a moment, but the stamp duty holiday boils down to lifting the tax threshold when you buy a property. Previously, stamp duty kicked in whenever the purchase price was above £125,000 on most sales. Now, there will normally be no tax to pay on the first £500,000 of the purchase. This rate will run until the end of June. From July to the end of September, you'll pay no tax on the first £250,000 of your purchase.

You might not have to pay a penny in tax on your next move. Not only that, but any sales that are currently in progress should be eligible for the benefit. "

Why is there a stamp duty holiday? 

Great question. It’s safe to say that recent events have slowed the housing market. Luckily, rather than house prices dropping, the market seems to have “frozen” — basically being suspended in time until lockdown lifted. By offering a major savings on stamp duty, the government is hoping to kickstart the property market and give those looking to get on the housing ladder a leg up.  

In fact, the government has said the average stamp duty bill will fall by £4,500 — and some buyers could save up to £15,000.

What about first-time buyers? 

First-time buyers are already given a break on stamp duty — for them, it normally only kicks in at £300,000. But the stamp duty holiday provides a bigger saving than the usual first-time buyer relief, so they’ll benefit as well. 

If you were looking at getting on the property ladder, this might be a good time to take that first step, because you could save thousands.

How much stamp duty will I pay? 

If you’re buying your main property, where you plan to live, you won’t pay any stamp duty on the first £500,000 up until the end of June. After that, you will have to pay some tax on your purchase using the rates below (or use a handy stamp duty calculator to do the maths, that’s what we'd do). 

  • 0% - up to £500,000

  • 5% - from £500,001 to £925,000

  • 10% - the portion from £925,001 to £1.5 million

  • 12% - the remaining amount, above £1.5 million

It’s easy to see why a calculator comes in handy. 

A whopping 81% of homes in England listed on Rightmove cost under £500,000 — so most sales could go through without a penny of stamp duty. 

And remember, from July to September you will pay no tax on the first £250,000 as the stamp duty holiday tapers out.

What about second homes? 

If you’re buying a second home or an investment property, you’ll benefit from the stamp duty holiday too. You’ll still have to pay the 3% higher rate of stamp duty, but it will be based on the stamp duty holiday rates, rather than the traditional stamp duty rates:

  • 3% - up to £500,000

  • 8% - from £500,001 to £925,000

  • 13% - the portion from £925,001 to £1.5 million

  • 15% - the remaining amount, above £1.5 million

A whopping 81% of homes in England listed on Rightmove cost under £500,000 — so most sales could go through without a penny of stamp duty. "

What about the property market? 

That’s a great question. While the market was temporarily frozen during lockdown, prices have held steady — and some agents predict that the stamp duty holiday will lead to a rush of purchases.

In fact, Rightmove is already reporting a 1.9% boost in prices in England compared to before lockdown, because of increased demand. These are definitely signs that the market is heating up. 

Feeling ready to move? We've got you sorted. Check out our Stamp Duty Guide for everything you need to know about stamp duty. For more information on the stamp duty holiday, check out the HMRC website. We can also help with mortgage advice and everything else you need.

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