Could you save thousands in Stamp Duty costs?
On the 8th of July, 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 tables below, you can see the difference these tax changes will make to your main home purchase.