Stamp duty holiday How much would the cut save?
UK Property investors benefit from tax savings announced in the chancellor’s summer statement
The UK chancellor, Rishi Sunak, aimed to revive confidence in the post-lockdown property market by lifting the threshold at which stamp duty kicks in from ￡125,000 to ￡500,000 in England and Northern Ireland. The new threshold took effect on Wednesday and will run until the end of March 2021.
Although property investors and second homeowners must continue to pay a 3 per cent stamp duty surcharge on purchases, they will pay no further duty on the first ￡500,000 of the property’s value.
For an investor buying a ￡500,000 property, this would halve the rate of duty payable from ￡30,000 to ￡15,000.
Those looking to move personal property into a company name because of better tax treatment may have been reluctant to do so because of the stamp duty implications.
A stamp duty holiday is designed to boost the market in several ways. Buyers are in a better position to qualify for a mortgage as reduced stamp tax allows them to wield a larger deposit. Sellers are more likely to come to the market during the time-limited period when they believe buyers have more money to spend, improving the stock of housing available to buy. The measure may also help those looking to remortgage if it succeeds in boosting demand, underpinning property valuations.
Stamp duty holiday calculator: How much would the cut save you if you move home?
This chart shows how stamp duty will be slashed during the tax holiday that will last until 31 March 2021, with a zero rate to ￡500,000. The red bars show bills under the old rates and the green bars show bills now under the stamp duty holiday
BUY-TO-LET AND SECOND HOME STAMP DUTY HOLIDAY RATES
Property purchase price Stamp duty rate
- ￡0 to ￡500,000 3%
- ￡501,000 to ￡925,000 8%
- ￡925,001 to ￡1.5 million 13%
- ￡1.5 million+ 15%
For purchases between 8 July 2020 and 31 March 2021
The stamp duty holiday applies in part to buy-to-let and second home purchases, but these buyers must still pay the 3 per cent surcharge at all levels including below ￡500,000.
This means that the zero rate becomes 3 per cent and that is added to rates above the standard owner occupier thresholds.
While this does not slash stamp duty bills by as much for buy-to-let and second homes, it does make purchases temporarily cheaper.
Call or message me today for professional guidance on investing for your future.