Stamp Duty is a tax that must be paid whenever you buy a property or land over a specific price in England or Northern Ireland.
The tax is designed to cover the cost of the legal documents involved in the transaction, therefore the amount of tax you pay varies according to how much your new property is valued at.
The current threshold price for having to pay Stamp Duty Land Tax is £500,000, due to the Stamp Duty holiday, which was imposed on July 8th 2020 by Chancellor Rishi Sunak.
This means that if your new home is below the price of £500,000, you are exempt from paying Stamp Duty. This applies until June 30th 2021.
On July 1st 2021, the Stamp Duty threshold price will lower to £250,000. This threshold price will last for three months, until September 30th 2021.
After this time period, the Stamp Duty threshold price will revert back to its original figure of £125,000. This means that you must pay the tax if your property is over £125,000.
Key dates following the Stamp Duty holiday extension:
- June 30th 2021 - last day of the £500,000 threshold
- July 1st 2021 - new £250,000 threshold introduced
- September 30th 2021 - last day of the £250,000 threshold
- October 1st 2021 - reverted back to the original £125,000 threshold
To ensure you benefit fully from the holiday, completion of your new home should take place before summer 2021.
The reason for the Stamp Duty holiday being introduced is to boost Britain’s housing market following the Covid-19 pandemic and to make buying a new home more accessible, especially for first-time buyers.
The stamp duty rate ranges from 2% to 12% of the purchase price, depending upon the value of the property bought, the purchase date and whether you are a first-time buyer or own multiple homes.
If you would like to establish a better understanding of approximately how much Stamp Duty you will be required to pay, the UK government website offers a ‘Stamp Duty Calculator’ for you to input your own specific figures. Explore the tax calculator here.
Hopefully, you now have a more detailed insight into why Stamp Duty exists, how it works and how it applies specifically to you. To find out more, read our Stamp Duty page here or contact our team if you have any queries here.
