The Government has scrapped stamp duty on property purchases of up to £500,000 until the end of March 2021 in a bid to boost the property market and help support home buyers and buy-to-let investors save on tax.
These changes could save buyers thousands of pounds, so if you’ve been considering making a move this year, now’s the time to get the ball rolling!
Here’s everything you need to know to take advantage of the new stamp duty threshold:
Previously, stamp duty charges would apply to purchases over £125,000 (or £300,000 for first-time buyers) but the threshold has been bumped up to £500,000 for all purchases in England and Northern Ireland until 31st March 2021. (Scotland and Wales have also announced similar changes to their land and buildings transaction taxes up to £250,000.)
The temporary changes will also affect properties costing more than £500,000, with stamp duty rates above the threshold tiered up to 15% of the total property value:
|PROPERTY VALUE||STAMP DUTY (%)|
|Up to £500,000||0%|
|£500,001 – £925,000||5%|
|£925,001 – £1.5m||10%|
For example, a property costing £750,000 would be charged 0% on the first £500,000, and 5% on the remaining £250,000, for a total of £12,500 in stamp duty – compared to £27,500 under the previous rates.
For buy-to-let purchases, or if the property is not your main residence, the rates are slightly different:
|SECOND PROPERTY VALUE||STAMP DUTY (%)|
|Up to £40,000||0%|
|£40,001 – £500,000||3%|
|£500,001 – £925,000||8%|
|£925,001 – £1.5m||13%|
Previously, additional properties up to £500,000 would have been subject to stamp duty rates of 3-8%, so there are still significant savings to be made for buy-to-lets and investment properties until the end of March 2021.
The Government suggests that the threshold increase will result in 9 out of 10 people buying a home before March 2021 won’t have to pay stamp duty at all, and the average stamp duty bill will fall by £4,500. The more expensive the property, the more buyers will save under the changes.
If you exchanged contracts before the stamp duty change, you could still benefit from the increased threshold so long as you complete the transaction before March 31 Remember: if you’re buying property in England or Northern Ireland you have 14 days from completion to pay stamp duty, or risk facing a fine and interest. Your solicitor should ensure that everything runs smoothly and all aspects of conveyancing are sorted out in plenty of time!
For more information on how the stamp duty changes might affect your property plans, or for advice on any other aspect of conveyancing, get in touch with our expert property team at Frances Lindsay & Co.