We all know how expensive buying and selling a property can be, with all the various fees and charges involved. During the covid 19 pandemic, the government offered a helping hand to buyers (and, indirectly, to sellers) by suspending stamp duty. This stamp duty holiday is set to end at the end of September, however, so here’s what you need to know about stamp duty for the rest of the year.
What is stamp duty?
Stamp duty, or to give it its full name, Stamp Duty Land Tax, is a tax on the purchase of a residential property, whether it’s a flat or a house.
The amount of duty you pay depends on how much you pay for the property and when you buy it.
The stamp duty holiday
Last July, Chancellor of the Exchequer, Rishi Sunak announced a stamp duty holiday until March 31 2021. There was no stamp duty levied on any property sold for £500,000 or less and then, during the March budget, he extended the holiday until June 30 2021.
From July 1, stamp duty comes back in, but it’ll have a staggered period before it comes back to pre-covid levels. Sunak extended the holiday because thousands of property purchases wouldn’t complete before March 31.
To help buyers for a little bit longer, the nil-rate of stamp duty, which usually ends at £125,000, won’t kick in until £250,000. It’ll revert back to £125,000 from October 1.
Those stamp duty rates in full
Up until June 30
Property purchase price up to £500,000 – 0% stamp duty
From £500,001 to £925,000 – 5% stamp duty
From £925,001 to £1.5 million – 10% stamp duty
Any amount above £1.5 million – 12% stamp duty
An example is a property that costs £700,000. You’ll pay stamp duty on the £200,000 above the threshold at a rate of 5%, which is £10,000.
From July 1 to September 30
All purchases up to £250,000 have 0% stamp duty
From £250,001 to £925,000 – 5% stamp duty
From £925,001 to £1.5 million – 10% stamp duty
Any amount over £1.5 million – 12% stamp duty
If you buy a property for £350,000, you’ll pay 5% stamp duty on £100,000, which is £5,000.
After October 1 2021
After October 1 2021, stamp duty rates revert back to pre-covid levels.
All purchases under £125,000 have 0% stamp duty
From £125,001 to £250,000 – 2% stamp duty
From £250,001 to £925,000 – 5% stamp duty
From £925,001 to £1.5 million – 10% stamp duty
Any amount over £1.5 million – 12% stamp duty
If you buy the property worth £350,000 after October 1, you’ll pay 2% stamp duty on the amount from £125,000 to £250,000 and 5% stamp duty on the amount over £250,000. This works out as £2,500 + £2,500, which is a total of £5,000.
