Stamp Duty Changes

On the 8th July the Chancellor unveiled that stamp duty on house purchases up to £500,00 would be temporarily removed. In addition, house prices over this threshold will see a reduction in the amount they pay. This will save home-buyers thousands of pounds and make moving to a new house seem a lot more attractive due to this saving.

Please note all the facts and figures below are based on purchasing a property in England and you will pay different tax on your property in Scotland or Wales.

 

What is stamp duty?

Stamp duty is a tax you have to pay when purchasing your home. First time buyers are usually exempt. The tax is calculated on the part of the property purchase price falling within each band.

It is important to note that you have 14 days from the date of completion to pay stamp duty. You could face a fine and potentially interest on top if you fail to make the payment within the time frame.

 

Previous Stamp duty charges – Prior to 8th July 2020

 

Portion of property price	Stamp duty charge
Up to £125,000	0%
£125,001 to £250,000	2%
£250,001 to £925,000	5%
£925,001 to £1.5m	10%
The portion above £1.5m	12%

An example of the charge you would have previously faced if you were purchasing a property worth £200,000, would be as follows:

• 0% on the first £125,000
• 2% on the remaining £75,000

Therefore, you would have a stamp duty charge of £1,500 to pay.

 

New Stamp duty charges – until 31st March 2021

 

Portion of property price	Stamp duty charge
£0 to £500,000	0%
£500,001 to £925,000	5%
£925,001 to £1.5m	10%
The portion above £1.5m	12%

 

What effect will the stamp duty reduction have? 

The Centre for Economics and Business Research (CEBR) have calculated an average saving will be £4,400 per property and result in 101,000 extra sales over the next nine months.