The Chancellor’s announcement on 8th July means buyers now won’t pay any stamp duty on homes up to £500,000 until 31st March 2020 – starting immediately.
This is great news for anyone thinking of moving home.
Previously, the threshold where buyers started paying stamp duty was £125,000, or £300,000 for first-time buyers (if buying a property worth less than £500,000).
So if you are buying a property under the new £500,000 threshold you now pay nothing in stamp duty. If you buy a property over this amount, just take £15,000 off what you would have paid before this announcement was made (£10,000 if you are a first-time buyer).
What is is stamp duty and how much does it cost?
Stamp duty land tax is a lump-sum tax that anyone buying a property or land over a certain amount has to pay.
The stamp duty rate varies based on the property price and type.
Before the announcement, if you were buying a property as your main residence you would pay:
Nothing on properties purchased for up to £125,000
2% on the portion of a property between £125,001 and £250,000
5% on the portion between £250,001 and £925,000
10% on the portion between £925,001 and £1,500,000
12% on the portion costing more than £1,500,001
From now until 31st March 2021, no one will pay stamp duty when buying a main home worth up to £500,000.
For properties costing more than £500,000, the stamp duty bands are unchanged – so if you buy a property worth £600,000 for example, you will pay £5,000 stamp duty (5% of the £100,000 above the threshold).
The 3% levy paid if you already own a home and are buying an additional property worth more than £40,000 still applies (though you’ll still pay less than you would due to the raised threshold).
How much will buyers save?
How much a buyer could save under the measure will depend on how much the property costs, but as a general rule, the more expensive the property, the more you will save (up to the maximum of £500,000).
For example, if you buy a property for £400,000 and you are not a first-time buyer, you would usually pay £10,000 (made up of £2,500 on the portion between £125,001 and £250,000, and £7,500 on the portion between £250,001 and £400,000) – but now, you will pay no stamp duty on the property at all – saving you £10,000.
What if I have already exchanged contracts but not completed?
The requirement to pay stamp duty is triggered when you complete the purchase of the property. So if you have exchanged prior to 8th July but not completed, you’ll benefit from the increased threshold.