In his spring budget review, the Chancellor, Rishi Sunak announced a 3 month extension to the Stamp Duty Land Tax Holiday. However, this is due to end on 30 June 2021 which is rapidly approaching. This article summarises the details of the Stamp Duty Holiday so that you can take advantage of it while it’s still here.

What is Stamp Duty Land Tax?

Stamp Duty Land Tax (SDLT) is a form of taxation which must be paid when you purchase a property which is above a set price in England and Northern Ireland.

There are multiple factors to consider when calculating how much SDLT you will pay when purchasing a property. This includes which SDLT threshold you fall under (house value), whether or not you are a first-time buyer and if the property is residential or non-residential. For more information, please click here.

What does the holiday mean for property buyers?

The extended stamp duty holiday means that no tax will be levied on the first £500,000 of property purchases in England and Northern Ireland until June 30. Then, from June 30 until September 30, tapering will mean no stamp duty will be charged on a residential property bought for up to £250,000.

The most recent lockdown has meant that many property deals have been significantly slowed down, and the holiday extension means that more people have the chance to save a significant amount of money – up to £15,000.

Does the stamp duty holiday apply to second homes and buy-to-let?

Yes, the SDLT holiday applies to the first £500,000 of the price of any residential property. However, buy-to-let investors will still be required to pay the stamp duty supercharge that applies to second homes. This supercharge has been in effect since April 2016 and means that people buying their second (or third) home in England and Northern Ireland have to contribute an additional 3% on each stamp duty band. Therefore, instead of paying 0% on the first £500,000, buy-to-let investors will have to pay 3%.

What is the stamp duty after September 2021?

On October 1, 2021, stamp duty in England and Northern Ireland is set to return to previous levels.

  • Up to £125,000 – no stamp duty tax applied
  • The portion between £125,001 and £250,000 – 2%
  • The portion between £250,001 and £925,000 – 5%
  • The portion between £925,001 and £1.5m – 10%
  • Above £1.5 million – 12%

Please note that first-time buyers already had a holiday where they did not have to pay stamp duty on properties costing up to £300,000 (and 5% up to £500,000).

Where the purchase is for an additional property (such as a second home or buy-to-let), the normal rates will come back into force on October 1, plus the additional 3% rate:

  • Properties up to £125,000 – 3%
  • The portion between £125,001 and £250,000 – 5% (2% + 3%)
  • The portion between £250,001 and £925,000 – 8% (5% + 3%)
  • The portion between £925,001 and £1.5m – 13% (10% + 3%)
  • The remaining amount, above £1.5m – 15% (12% + 3%)

In such unprecedented circumstances, good news like this appears to be few and far between; if you are looking to buy a house, now is your time to so before 30 June 2021.

If you have any questions relating to the content in this article, please contact your usual Partner or Manager, or call us on 01942 242 245, and we will be happy to help.