Temporary Stamp Duty Holiday in England And Northern Ireland

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The UK declared a stamp duty holiday effective from July 15 to March 31, 2021, in relation to the summer statement 2020 by the chancellor. But what is it? More importantly, how will it affect you?

Stamp Duty Holiday – Spring Budget Update (applicable in England)

Stamp Duty Holiday also gets extended till the end of June, which is great news for people who have purchased new properties recently. This suspension has been applied to the first £500,000 of all sales in England since July of last year.

In light of the current pandemic, UK’s chancellor Rishi Sunak has temporarily put stamp duty land tax on a holiday. This means that home buyers or movers will not have to pay the levy on their estate purchases of up to £500,000.

Raising the tax threshold was the government’s attempt to boost the property market, which dropped tremendously last May. The 1.7% plunge of property price index two months ago was the most significant decline in the history of the UK.

Temporarily relieving tax duties also helped property buyers who had the rug pulled from under their feet during the coronavirus outbreak. With this, approximately nine out of ten home purchasers would not have to pay the tax altogether.

If you have wanted to buy a new house for your family, this is the best time to do it. Here are the basics of stamp duty and the latest changes imposed.

What is Stamp Duty?

In relation to the stamp duty holiday; Stamp Duty Land Tax (SDLT) is a government-mandated tax responsibility for buyers of properties or land within the borders of England and Northern Ireland.

For residents of Scotland, it is called Land and Buildings Transaction, while in Wales, people have to pay for Land Transaction Tax for sales completed on or after April 1, 2018.

An SDLT mandates you to pay the levy when you:

  • Purchase a freehold or leasehold property.
  • Buy land via a shared ownership scheme.
  • Transfer land or real estate for payment (e.g., buy shares in a residential home)

Before the chancellor’s announcement of stamp duty holiday, the current SDLT threshold for residential real estate is £125,000. For non-residential land, it is £150,000.

Other regulations and considerations when you are a first-time buyer include the following.

  • A relief if a purchase is made on or after November 22, 2017
  • A discount if the sale price is £500,000 or less.

Basically, the rate you have to pay depends on the kind and amount of the property you are buying. Landlords need to pay a stamp duty of 3% when they acquire a buy-to-let property.

What will change?

The increase in the SDLT threshold changes several things that will benefit homebuyers in England and Northern Ireland.

For starters, all property sales before March 31, 2021, costing more than £500,000, is exempted from stamp responsibility. The starting rate of 5% applies to those exceeding the threshold. For example, a land that cost £700,000 is subjected to a levy of £10,000.

The average stamp bills plummet by £4,500, meaning buyers will be able to save as much as £15,000 on properties.

Stamp Duty Holiday: Will this help the housing industry?

Provided that it will go as planned, real estate agents and brokers feel that the property market will see a surge in clients.

According to property analysis, half a million real estate owners will be allowed to skip taxes, which is a significant reduction to every household’s budget.

This entices first-time buyers and those looking to move for a long-time but delayed by the current recession. Both the demand and supply chain will see a significant increase with the enactment of this tax stamp duty holiday. 

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Annette Ferguson

Annette Ferguson

Owner of Annette & Co. - Chartered Accountants & Certifed Profit First Professionals. Helping Online service-based entrepreneurs find clarity in their numbers, increase wealth and have more money in their pockets.

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