Stamp Duty Holiday Winds Down, So What Does It Mean For You?

Last July the Chancellor, Rishi Sunak, unveiled a Stamp Duty Holiday in an attempt to boost the housing market after the first national lockdown. The threshold at which buyers start paying stamp duty raised from £125,001 to £500,001 in England and Northern Ireland.

In Wales, the threshold at which a home buyer would start paying Land Transactional Tax (Welsh Stamp Duty equivalent) was raised from £180,001 to £250,001. This was significantly lower than their English counterparts, however, with house values significantly lower in Wales the Welsh public purse would have been hit hard by a tax holiday.

As of 1st July 2021, the Chancellor’s tax holiday starts to be wound down. So, what will it mean for you?

 

What are the normal stamp duty rates?

Under normal circumstances, buyers will have to pay stamp duty when buying a home or piece of land. It is charged on a tiered basis, so you only pay the higher rates on the slice above any threshold (same as income tax). The rates are as follows:

England and Northern Ireland

  • 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%

Wales

  • Up to £180,000: 0%
  • On the portion from £180,001 to £250,000: 3.5%
  • On the portion from £250,001 to £400,000: 5%
  • On the portion from £400,001 to £750,000: 7.5%
  • On the portion from £750,001 to £1.5m: 10%
  • Above £1.5m: 12%

 

From 1st July 2021

Land Transactional Tax in Wales will revert to the above rates, whilst in England and Northern Ireland home buyers will still benefit from a “tapered holiday rate” until the 30th September 2021, as shown below:

  • Up to £250,000: 0%
  • On the portion from £250,001 to £925,000: 5%
  • On the portion from £925,001 to £1.5m: 10%
  • Above £1.5m: 12%

 

Other Considerations

Whilst the above rates are applicable for home and land buyers, it is possible you could end up paying more or less depending on your circumstances.

There are exemptions available for first time buyers in England & Northern Ireland and Wales. There are as follows:

  • England & N Ireland – Up to £300,000: 0%
  • Wales – Up to £250,000: 0%

Meanwhile, people 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. The surcharge effectively works as a slab tax. In other words, the 3% loading applies to the entire purchase price of the property.

There has also been an additional 2% stamp duty levy on non-UK residents who buy property in England and Northern Ireland since April 2021.

 

 

If you are currently looking to purchase a new home and you would like to speak to one of our specialists, visit www.bee-sure.co.uk for more information, Contact Us for a free consultation or email info@bee-sure.co.uk

Alternatively you could use the tool below to calculate how much Stamp Duty you will need to pay: https://www.moneysavingexpert.com/mortgages/stamp-duty/

 

Written by Jon Williams DipFA CeMAP, IFA at Beesure Ltd

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