Stamp Duty Holiday FAQ
What is stamp duty?
For residential transactions, it is the tax you pay when you purchase a property over £125,000.00. There are exemptions to this, such as being a first-time buyer, which allows you to purchase a property for up to £250,000.00 and pay no stamp duty at all.
So, what does the holiday change?
It allows anybody (who does not own another property at the time) to complete on a purchase transaction of up to £500,000.00 and not pay any stamp duty at all.
For those who do own other properties, it reduces the higher rate of land tax to 3% (up to £5000,000.00) rather than the usual 5%.
What is the purpose?
The holiday was announced with immediate effect on 8 July as part of the economic response to the Covid-19 pandemic.
During the first lockdown, the property market slowed down due to people not being able to move house as normal or not being able to commit to a house purchase.
As the UK economy starts to get back on its feet, many people have taken advantage of the discounted rate and put their property on the market.
Others have stretched their budget and found properties for more than what they anticipated they would be able to afford before the holiday came into place.
How your solicitor is involved
You will need a solicitor for any property transaction. Your solicitor can tell you how much stamp duty will be payable on the date of completion and will submit what is known as a ‘Stamp Duty Return’ on your behalf.
Unfortunately, the holiday ends on 31 March 2021 and the land tax rates will revert to what they were before July 2020. For example:
- You purchase a property now for £499,000.00. Stamp duty payable = £0.00.
- You purchase a property on 1 April 2021. Stamp duty payable = £14,950.00.
Consequently, the property market is now booming and there is a rush for everybody to get their transactions completed before 31 March.
Please contact our residential conveyancing team for any questions you may have.