HOW WILL THE STAMP DUTY HOLIDAY WORK?
Today the Chancellor Rishi Sunak announced a holiday on stamp duty for property purchases up to £500,000 with immediate effect. The initial suggestions are this is going to last until March in a bid to stimulate the housing market and help all people looking to purchase a property since the impact of the Coronavirus.
The holiday applies to people who complete a transaction on their main residence up to £500,000 in England and Northern Ireland, which could save people up to £15,000, a significant amount of money. People who complete on properties for higher than £500,000 will only be charged stamp duty on the difference between the £500,000 and the respective purchase price.
The governments objectives for this move are
- To help buyers who have been hit financially by the coronavirus
- To boost the property market as a whole hit by the market basically been closed during lockdown.
I AM LOOKING TO PURCHASE A PROPERTY HOW MUCH STAMP DUTY WILL I PAY?
As previously explained if you are looking to purchase a property and the agreed purchase price is anything up to £500,000 then you will not be liable to pay any stamp duty. The next tier is a purchase price from £500,001 – £925,000 where a stamp duty level of 5% will be due. The next tier been £925,001-£1.5 Million at 10% and anything over £1.5 Million a liability of 12% will be payable.
Landlords and second home buyers also qualify for the cut but they are still liable for the extra 3% charge once stamp duty applies to the transaction.
SO WHAT HAS CHANGED?
Prior to the announcement stamp duty was due on any agreed purchases at £125,000 or higher. However, any first-time buyers didn’t pay the liability on any agreed purchase up to £300,000.
WHAT ABOUT IF I HAVE JUST COMPLETED A TRANSACTION?
The stamp duty holiday came into effect today (08th July 2020). Therefore, if for example you completed on a purchase last week you will not be liable for any refunds and stamp duty will be paid at the rate before the holiday came into force. However, one thing to consider is stamp duty is payable on completion not exchange. Therefore, if for example you exchanged contracts on your agreed purchase last week and the completion date is 10th July 2020 you will be entitled to the stamp duty holiday.