Back in July 2020, the Government announced a stamp duty holiday. This means that until the 31st March 2021, those buying a property in England and Northern Ireland will pay stamp duty at a higher rate of £500,000. 

UK Stamp Duty

Stamp Duty Land Tax (SDLT) is a tax that you pay when you purchase a property or land over a certain price in England and Northern Ireland.

Normally, the stamp duty threshold is £125,000. For properties above this threshold, tax is charged at different percentages on different portions of the price.

For more information see the table below.

Property Value Stamp Duty Land Tax (SDLT) Rate
Up to £125,000 0%
£125,001 - £250,000 2%
£250,001 - £925,000 5%
£925,000 - £1.5m 10%
  • £1.5m
12%

Example: For a property worth £500,000, you would pay 0% stamp duty on the first £125,000, then 2% on the next £125,000 (£2,500), then 5% on the next £250,000 (£12,500).

Three Ways to make the most of the UK Stamp Duty Holiday

 

  1. 1.Buy a new home

Homeowners looking to move up the ladder can make substantial savings with the UK Stamp Duty Holiday. Beforehand, normal stamp duty rates applied for those looking to sell their home and move up the ladder. This means that for anything over £125,000 homeowners were paying stamp duty.

Now, stamp duty only kicks in at £500,000. This means for anyone buying a property worth over £125,000, you’re saving money. Those buying a home worth £500,000 and above stand to make the biggest saving - £15,000 in total.

If you’re looking to purchase a home in a more expensive area like London, this is good news.

For more information see the table below.

Property Price Old Stamp Duty Rules New Stamp Duty Rules Savings
£125,000 £0 £0 £0
£2000,000 £1,500 £0 £1,500
£300,000 £5,000 £0 £5,000
£400,000 £10,000 £0 £10,000
£500,000 £15,000 £0 £15,000
  1. 2.Invest in Buy to Let Property

Property Investors and those buying second homes also look to make big savings. Beforehand, those buying additional properties had to pay a 3% Stamp Duty Land Tax surcharge. This meant, when purchasing a property, you would pay 3% stamp duty on the first £125,000 (rather than 0%), then 5% on the next £125,000 (rather than 2%) and so on.

The raised stamp duty threshold means investors pay just 3% Stamp Duty for homes under £500,000. Previously, an investor buying a £500,000 property would have needed to pay 3% on the first £125,000 (£3,750), 5% on the next £125,000 (£6,250) and 8% on the next £250,000 (£20,000). Now, they’ll only need to pay 3% on the whole £500,000 (£15,000) - resulting in a saving of £15,000.

In popular rental areas like London, this is good news.

Property Price Old Stamp Duty Rules New Stamp Duty Rules Savings
£125,000 £3,750 £3,750 £0
£2000,000 £7,500 £6,000 £1,500
£300,000 £14,000 £9,000 £5,000
£400,000 £22,000 £12,000 £10,000
£500,000 £30,000 £15,000 £15,000

 

  1. 3.Sell your home

Homeowners looking to sell their property also benefit from the UK Stamp Duty Holiday. The new Stamp Duty savings combined with months of pent-up demand during lockdown mean there is a lot of buyers right now. If you’re thinking of selling your property, now is the time.

Buyers looking for property in London stand to make the biggest savings due to property prices being higher here than the UK average. If you have a London home to sell, we suggest you act now.

 

How Hastings International can help

Whether you are looking to buy a new home, purchase a buy-to-let or sell your exiting London property, contact Hastings International. We are specialists in the London property market and can help make your property journey as simple as possible.