With the stamp duty holiday set to end on 30th June 2021, we’re taking a look at how this could affect you.
If you’re in the process of buying a property, you’re probably biting your nails wondering whether your conveyancing needs to be completed before 30th June in order to benefit from the stamp duty holiday. We’re revealing all in this article.
Since July 2020, potential homeowners haven’t had to pay tax on homes up to £500,000 but that will soon change. This only applied to those purchasing property in England and Wales.
Stamp duty rates won’t snap back to their original prices, instead there will be a gradual and staggered reintroduction of the former stamp duty rates until 1st October.
What is stamp duty?
There are many costs associated with buying property, and stamp duty land tax is one such cost. As the name suggests, it is a land tax which is payable after purchasing a property and is calculated based on the value of your property. In other words, the more expensive your property the more stamp duty you will pay.
In England and Northern Ireland, you have 14 days from completion to pay the total sum of your stamp duty tax. Stamp duty applies across the UK, but different criteria apply in Scotland and Wales.
Who is eligible for the stamp duty discount?
First things first, it’s helpful to know whether you are actually eligible for this tax relief.
The stamp duty discount was intended for first-time buyers, so if you’re already a homeowner or a second property buyer unfortunately you won’t be able to benefit from the full stamp duty discount.
However, this doesn’t spell the end of your eligibility for stamp duty relief full stop, it just means you won’t be able to benefit from the optimum discount amount anymore.
Have I missed the boat?
With most conveyancing taking around 12 weeks to complete, it’s safe to say that if you haven’t already jumped on the property-buying bandwagon you’re likely to miss the June 30th deadline.
If you’ve already instructed conveyancers and are running through the legal motions of buying a property, whether or not you will receive the tax holiday will depend on how far along the conveyancing process you are and how efficient the run-up to completion is.
There are many things that can set back completion of a property purchase and it’s important to not pin too many hopes on securing the stamp duty relief at this point in time.
However, this doesn’t spell the end of your eligibility for stamp duty relief full stop, it just means you won’t be able to benefit from the optimum amount discount anymore.
The current discount (available up until 30th June) includes zero tax paid for properties up to the value of £500,000.
You may still be able to complete a home purchase before 30th September 2021, where the stamp duty threshold of £125,000 has now been doubled to £250,000.
How much stamp duty will I pay after 30th June?
Between July 1st and September 30th, 2021:
- Up to £250,000 – no stamp duty
- £250,001 to £925,000 – 5% stamp duty
- £925,001 to £1.5m – 10% stamp duty
- Above £1.5m – 12% stamp duty
How much stamp duty will I pay after October 1st?
Stamp duty rates return to the standard rate from October 1st, 2021:
- Up to £125,000 – no stamp duty
- £125,001 to £250,000 – 2% stamp duty
- £250,001 to £925,000 – 5% stamp duty
- £925,001 to £1.5 million – 10% stamp duty
- Above £1.5 million – 12% stamp duty
This means you need to have completed your property purchase by 30 September to benefit from the stamp duty holiday. If you exchange on or before September, but complete after 30 September, then you’ll have missed the deadline and will need to pay the normal rate of stamp duty.
How is the total stamp duty calculated?
Perhaps the best way to demonstrate how stamp duty tax is calculated is to show a breakdown of the fees.
This is an example taken from the Gov.UK website.
In July 2021, if you buy a house for £275,000, the stamp duty you owe will be calculated as follows:
- 0% on the first £250,000 = £0
- 5% on the remaining £25,000 = £1,250
Could the deadline change?
With talk of a potential winter lockdown due to statistics showing a third wave is imminent, you may be wondering whether the end of the stamp duty holiday may be a moveable feast.
Whilst the government has constantly pushed dates back, including for furlough and end of lockdown periods, it’s difficult to say at the moment whether the official cut-off date for the stamp duty holiday tax could be pushed back.
We’ll certainly be keeping an eye out for any changes and inform our clients and readers of any updates and how this will affect them.
Still not sure how much stamp duty you need to pay or whether you’re eligible for a discount?
There’s no need to worry if the constant fluctuations in stamp duty tax have got your head in a spin. You can always use the official stamp duty Land Tax calculator which should be able to give you an accurate, up to date estimate of the total stamp tax you are likely to pay.
A conveyancer can also help calculate how much stamp duty you will need to pay with a property purchase. They can go one step further by helping you to factor this into the overall cost of moving house so you can determine how much you can afford and stay on budget.
Looking for a mortgage advisor?
At Agentis, we keep abreast of the latest property-buying news to keep our clients informed and prepared. Our knowledgeable mortgage advisors never miss a beat when it comes to the property market and will help get you moving.
If you’re worried about missing the deadline or how the changes to the stamp duty holiday could affect you, speak to one of our trusted mortgage advisors today. We’ll help get your agreement in principle sorted and ensure all your mortgage application process is completed correctly and efficiently to prevent unnecessary delays to your house move.