The KWW property team is poised to handle an increase in conveyancing enquiries now Chancellor Rishi Sunak has confirmed a temporary stamp duty land tax holiday.
The move announced yesterday (July 8) aims to help buyers who have taken a financial hit due to the Covid-19 pandemic, while also seeking to stop house prices from falling further in the months ahead. Average house prices fell for four months in a row between January and April 2020, while the Chancellor said property transactions were down 50% in May.
With immediate effect, the lower threshold at which the tax is paid has been temporarily raised from £125,000 to £500,000 until next spring. That means most property purchases in England and Northern Ireland below £500,000 will not need to pay stamp duty land tax as long as the deal is completed before 31 March 2021.
The Treasury said almost nine out of ten people buying a main home will pay no stamp duty land tax at all until next April, and the measure will cost around £3.8bn.
The 2% threshold, which kicked in from over £125,000 to £250,000, no longer applies until April 1, 2021.
At the time of writing, this measure does not apply to land transaction tax in Wales or land and buildings transaction tax in Scotland.
The stamp duty land tax changes only apply on the transfer of residential properties in England and Northern Ireland. Tax is only payable on the part of the property price within each band (see table below).
The temporary changes announced by the Chancellor also affect first-time buyers, who previously paid nothing on the first £300,000 for properties worth up to £500,000 while a rate of 5% applied between £300,000 and £500,000.
Someone who wishes to buy a second home would not pay stamp duty land tax up to £500,000 but would still be liable to pay the 3% surcharge on the whole purchase price.
|July 8, 2020 to March 31, 2021||Rate||April 6, 2020 to July 7. 2020||Rate|
|Up to £500,000||0%||Up to £125,000||0%|
|Over £500,000 to £925,000||5%||Over £125,000 to £250,000||2%|
|Over £925,000 to £1.5m||10%||Over £250,000 to £925,000||5%|
|Above £1.5m||12%||Over £925,000 to £1.5m||10%|
|Source: HM Treasury|