How to make the most of the UK’s Stamp Duty holiday

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Investment News
18 Dec 2020
2 min read
Blog
Investment News

How to make the most of the UK’s Stamp Duty holiday

18 Dec 2020
2 min read
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What does the Stamp Duty holiday mean?

The repercussions of the arrival of Covid-19 in the UK at the start of 2020 caused a huge shift to the economy, with sectors (including the property industry) ground to a complete halt.

With property viewings and transactions temporarily slowed due to the first lockdown, the government introduced policies to reinvigorate the housing market including a temporary Stamp Duty holiday.

In simple terms, the threshold at which buyers have to start paying Stamp Duty in England has been raised from £125,000 to £500,000. With the average Stamp Duty bill reduced by £4,500, almost nine out of ten transactions are currently exempt from tax.

What date does Stamp Duty holiday end?

Originally the Stamp Duty holiday was set to end on March 31st 2021, however, Chancellor Rishi Sunak unveiled a 3-month extension in the 2021 Budget which means that investors have up until June 31st 2021 to make the most of the tax savings on offer.

For buyers based overseas, there is an additional deadline Stamp Duty deadline on the horizon with the introduction of a 2% foreign resident surcharge set to come into effect from April 1st 2021.

How much is Stamp Duty 2020/2021?

The below table outlines the standard rate and the buy-to-let rate of Stamp Duty payable on a property in England. To determine the amount of tax you will pay on your next property purchase, click here to access an online Stamp Duty calculator.

Under the current Stamp Duty holiday rules, the threshold has been raised from £125,000 to £500,000.

Buy-to-let and second home Stamp Duty tax bands

BracketsStandard rateBuy-to-let/second home rate
Up to £125,0000%3%
£125,001 – £250,0002%5%
£250,001 – £925,0005%8%
£925,001 – £1.5m10%13%
Over £1.5m12%15%
Source: HMRC

For buy-to-let investors who wish to reduce the upfront cost of their next property purchase, now is the time to invest to reap the benefits of the higher Stamp Duty threshold.

What’s more, low intertest rates combined with a reduced upfront SDLT obligation means that UK property offers investors great value for money.

For more information about how you can benefit from the Stamp Duty holiday, contact Town Square Invest.