STAMP DUTY HOW MUCH DO YOU NOW PAY

STAMP DUTY HOW MUCH DO YOU NOW PAY

Could you save thousands in Stamp Duty costs?

Today, Chancellor of the Exchequer, Rishi Sunak announced that anyone looking to purchase a main home under £500,000 will pay absolutely nothing in stamp duty tax. The cuts to stamp duty tax will remain in place until 31st March 2021 – saving buyers thousands.

In his statement today, he noted that the average stamp duty bill will fall by £4,500. Buyers of additional properties, such as second homes and buy-to-let properties, will also benefit from this tax cut.

If you’re wondering what this means for you, you’re in the right place.

Here’s everything you need to know about stamp duty and the new changes.

What is Stamp Duty?

Stamp Duty Land Tax (SDLT) is the tax that must be paid when you purchase a property or a piece of land. The amount of money required for stamp duty depends on the overall price of the property as well as factors like whether it is residential or non-residential and whether or not you are a First Time Buyer.

How much would you usually pay?

If the property is worth between £125,001 and £250,000, the stamp duty land tax rate is 2%. So if the property was valued at £250,000, you would have to pay an extra £2,500 in stamp duty tax.

For the next £675,000, the rate is 5%. If the property you were purchasing was valued between £250,001 and £925,000 bracket, the buyer would not pay any stamp duty on the first £125,000, but would pay a 2% rate on the next £125,000 and would pay a 5% rate on the following £675,000. So, as you can see, the tax charges add up.

Under these new tax changes, there will be absolutely no stamp duty tax on homes up to £500,000 and then 5% between £501,000 and £925,000.

Benefits if you’re buying a property

These new changes mean you could save thousands in tax costs on your new main home. If, for example, you were purchasing in an area where the average house price is £500,000 you could save a whopping £15,000 by purchasing now, whilst the stamp duty cut is in place.

If you take a look at the table below, you can see the difference these tax changes will make to your main home purchase.

If you take a look at the table below, you can see the difference these changes make to the amount of Stamp Duty you will pay.

Benefits if you're a landlord or buying a second property

There’s also great news for landlords and those of you purchasing a second or additional property. Where previously there would have been the higher buying tax rate and an additional 3% tax fee, now anyone looking to purchase will only have to pay 3% up to £500,000. For this reason, buying property will now be cheaper for landlords.

Benefits if you’re selling a property

If buyers are saving thousands in tax costs on the prices of their homes, they are more likely to pay your asking price. Equally, when you come to purchase a new main home, you would usually have paid a higher level of stamp duty as you’re not a First Time Buyer. However, under these new tax changes, you could find yourself saving a tidy lump sum.

So, what’s next?

Who knows when there will be an opportunity to save on stamp duty like this again? The announcement today is designed to give the UK economy a shot in the arm and, at the same time, it brings with it the opportunity for buyers to save thousands.

Now is a brilliant time to move and make these savings.

It's time to get moving

Now is a brilliant time to move and make these savings.