Stamp duty tax: what’s new?
Many buyers are currently enjoying the extended stamp duty tax holiday in England and Northern Ireland before it comes to an end on 30th June…
Estate agents, conveyancers, IFAs & financial lending institutions have never been so busy, but when will this bubble burst?
When do stamp duty rates change?
It’s been almost a year since the temporary reduction of stamp duty tax rates. The change has meant there is no stamp duty tax to pay for first-time buyers and home movers on purchases priced at or below £500,000 before 30th June 2021. The reduction offers buyers a potential saving of up to £15,000.
The stamp duty holiday has already been extended once, from 31st March 2021 to 30th June 2021. From 1st July 2021, there will be a tapered return to previous stamp duty rates, with the nil-rate band lowered from £500,000 to £250,000 until the end of September. From 1st October, it will return to £125,000.
The amount of stamp duty tax you’ll need to pay depends on a wide range of factors, including how much you pay for the property, the location of the property, whether you have a UK passport, when you buy and whether you’re a first-time buyer. It also depends on whether you’re buying a main home, a holiday home or an investment property.
Stamp duty changes: key dates
8th July 2020: Chancellor Rishi Sunak announced a temporary cut to Stamp Duty Land Tax (SDLT) in England and Northern Ireland, raising the nil-rate threshold from £125,000, to £500,000, until 31st March 2021.
3rd March 2021: In his Spring Budget speech, the Chancellor said that due to the high volume of home sales underway, many new purchases wouldn’t have time to complete by the end of March. So the stamp duty holiday holiday was extended by three months, until 30th June. Also, the nil rate band – the portion of the property purchase that does not incur stamp duty tax – would be lowered to £250,000 from July, and only return to the usual level of £125,000 from 1st October 2021.
30th June 2021: You must complete a property purchase by 30th June to benefit from the maximum stamp duty holiday savings currently in place.
1st July 2021: From 1st July 2021 until 30th September 2021, there is a tapered return to previous stamp duty rates. During this time, many buyers of a main home in England or Northern Ireland won’t pay any stamp duty on the first £250,000 of the purchase price.
30th September 2021: You must complete a property purchase by 30th September to benefit from the tapered extension of the stamp duty holiday rates.
1st October 2021: Stamp duty rates are due to return to the levels which were in place prior to 8th July, 2020.
Will there be any changes to Land Transaction Tax (LTT) in Wales?
In Wales, a temporary reduction to Land Transaction Tax was set to end on 31st March, but this was also extended by a further three months and will now end on 30th June 2021.
What about Land & Buildings Transaction Tax (LBTT) in Scotland?
In Scotland, there was a Land & Buildings Transaction Tax (LBTT) holiday, which also offered reduced tax rates for buyers, but the holiday was not extended beyond 31st March 2021.
Summary
We know the current plan is for tax free stamp duty threshold to drop from £500,000 to £250,00 by 30th June 2021, then dropping to the nominal £125,000 rate by 30th September 2021.
Since the cut in stamp duty tax, property transactions have hit an all time high with estate agents, conveyancers, IFAs and financial institutions being overloaded with enquiries.
From 1st October 2021 we may slowly begin to see the affects of the removal of the stamp duty holiday.
What are your thoughts on the stamp duty tax holiday coming to an end….?