Coronavirus Blog Series:
Temporary Relief on Stamp Duty
Published 8 July 2020.
The Chancellor has announced a ‘temporary holiday’ on stamp duty on the first £500,000 of all property sales in England and Northern Ireland.
The threshold at which the tax is charged has been raised to £500,000 and is available from 8 July 2020 until 31 March 2021. The initiative has been introduced to help house buyers who may be struggling because of the coronavirus crisis and to help boost the property market.
What is Stamp Duty?
Stamp Duty Land Tax is a tax payable by an individual or a business in a transaction involving land. A certain percentage of the purchase is paid to Inland Revenue based on the value of the property – the greater the value of the property, the greater the SDLT paid.
Stamp duty land tax can be paid on both residential and non-residential properties and applies on purchases over £125,000. First-time buyers however pay no tax up to £300,000 and 5% on any portion between £300,000 and £500,000.
For people who have bought a home before, rates are 2% on £125,001-£250,000, 5% on £250,001-£925,000, 10% on £925,001-£1.5m, and 12% on any value above £1.5m.
Additional properties, including buy-to-lets and second homes, also have to pay an additional 3% of the purchase price in stamp duty.
What happens now?
Any property purchases below the new level will not need to pay stamp duty as long as the purchase is completed before 31 March 2021. Those buying second homes and buy-to-let properties will also benefit, but will still have to pay the 3% extra duty due on the entire price.
The Chancellor states that the average stamp duty bill will fall by £4,500, and purposed that nearly nine out of 10 people buying a home this year will pay no stamp duty at all.
How can we help?
Emma Smyth, Property Solicitor at MKB Law, comments: “Today’s announcement by the Chancellor is a welcome boost for the property market as we emerge out of lockdown. The incentive will benefit not only first-time buyers, but also home movers.”
Our Residential Property and Conveyancing team can provide house-buyers with sound advice in the area of stamp duty land tax planning. Our day-to-day involvement with the local property market enables us to provide practical and prompt advice on all property transactions.
Should you require any further information, please contact the Property solicitors at MKB Law.
Source: BBC News. This article is for general guidance only and should not be regarded as a substitute for professional legal advice.