How could Stamp Duty changes affect you?

Stamp Duty 650Stamp duty is a tax that all people buying properties must pay. The amount varies across the UK and is dependent on the price of the property being purchased.

Where previously stamp duty applied to houses costing more than £125,000 (or £300,000 for first-time buyers), changes announced in the Chancellor’s Summer Economic Statement mean that no Stamp Duty will be paid on properties less that £500,000 in England and Northern Ireland for almost 9 months, and reduced rates after that.

New changes to Stamp Duty – applies to all residential properties purchased on 8 July to 31 March 2021 bought in England & NI.

  • Due to the pandemic and current financial climate, an attempt to boost the housing market has been made by the Government.
  • The Chancellor confirmed that only residential properties purchased with a value of or exceeding £500,000 would have to pay stamp duty.
  • Any residential properties below this value would be exempt from paying any Stamp Duty charge.
  • Additional properties would be subjected to a lower charge.

I am buying a house – how much could I save?

That depends on the price of the house. If it is less than £125,000, then you would never have had to pay any stamp duty. If it is over £125,000 the saving will look like this:

Property value Old Charge New Charge Saving
£100,000 £0 £0 £0
£200,000 £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
£600,000 £20,000 £5,000 £15,000
£700,000 £25,000 £10,000 £15,000

You can find out exactly how much stamp duty you will need to pay by using this calculator.

I am a first-time buyer – how much will I save?

First time buyers are already exempt from stamp duty for properties valued at £300,000 or less, but now you can buy a property up to the value of £500,000 with no stamp duty. After £500,000, the tax would apply at the reduced rate, as shown above.

You can find out exactly how much stamp duty you will need to pay by using this calculator.

I have just bought a house – did I miss out?

Not necessarily – stamp duty is payable upon completion, so if you've exchanged contracts and are currently waiting for completion you will be able to benefit from the change.
If you completed before 8 July, then you will have to pay the normal stamp duty.

I am buying an additional property – how much could I save?

If you’re buying a second home, you’ll still need to pay the 3% stamp duty surcharge, but this will be on the new temporary rates, so significant savings can be made.
For example, the stamp duty previously payable on a second home worth £250,000 was £10,000, calculated like this:

  • 3% on the first £125,000 (£3,750)
  • 5% on the second £125,000 (£6,250)

With the new rates, as shown below, you would pay 3% stamp duty on the whole purchase price – meaning you pay £7,500 and save £2,500.

 Property Price  Percentage payable in stamp duty
 upto £500,000  3%
 £500,001 to £925,000  8%
 £925,001 to £1.5m  13%
 Above £1.5m  15%

You can find out exactly how much stamp duty you will need to pay by using this calculator.

I am a buy-to-let landlord – how much could I save?

If you’re buying an investment property, you’ll still need to pay the 3% stamp duty surcharge, but this will be on the new temporary rates – so you could still make savings.
For example, the stamp duty previously payable on an investment property worth £250,000 was £10,000, calculated like this:

  • 3% on the first £125,000 (£3,750)
  • 5% on the second £125,000 (£6,250)

With the new rates, as shown below, you would pay 3% stamp duty on the whole purchase price – meaning you pay £7,500 and save £2,500.

 Property Price  Percentage payable in stamp duty
 upto £500,000  3%
 £500,001 to £925,000  8%
 £925,001 to £1.5m  13%
 Above £1.5m  15%

You can find out exactly how much stamp duty you will need to pay by using this calculator.

I live in Wales or Scotland – how much could I save?

The new stamp duty rates only apply in England and Northern Ireland, so normal rules apply.
In Scotland, the rates on Land and Buildings Transaction Tax are:

  • 2% on £145,001-£250,000
  • 5% on £250,001-£325,000
  • 10% on £325,001-£750,000
  • 12% on any value above £750,000
  • Scottish landlords pay an extra 4% Land and Buildings Transaction Tax on top of standard rates.

In Wales, the rates on Land Transaction Tax are:

  • 3.5% on £180,001-£250,000
  • 5% on £250,001-£400,000
  • 7.5% on £400,001-£750,000
  • 10% on £750,001-£1.5m, and 12% on any value above £1.5m
  • Welsh landlords pay an extra 3% Land Transaction Tax on top of standard rates.

My company is buying property – will I save?

There are different rules for a corporate body purchasing residential property for more than £500,000. You can find out more information here.

If you’d be interested in finding out more about our Sharia compliant Islamic home finance products for homeowners and buy to let investors, please visit our website.

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