What you need to know about stamp duty
You may have heard a lot about stamp duty recently due to the stamp duty holiday that was announced in July, but do you know how much it could save you?
Introduced back in July, the stamp duty holiday has already helped countless home-movers save money, by reducing the amount of stamp duty land tax that is payable as part of every property purchase. Before we jump into how much you could save on stamp duty, as a result of the new stamp duty holiday, let’s take a moment to revisit what stamp duty actually is.
What is stamp duty?
Stamp duty is the shorthand reference for Stamp Duty Land Tax (SDLT) and is a form of tax that is paid when you purchase property or land above a certain price threshold in England or Northern Ireland. Remember that if you purchase land or property in Scotland or Wales, there are equivalents of this tax that will still need to be paid, so make sure you have budgeted for this accordingly.
Prior to the holiday being announced, you were eligible to pay for stamp duty on any property over £125,000, or if you were a first-time buyer, on any property over £300,000.
The stamp duty holiday has raised this threshold to £500,000 so, if you’re looking to trade up, you may well be able to save a fair amount of money on your move by completing your purchase before the holiday ends on 31st March 2021.
How much can I save on stamp duty if I buy before the end of the holiday?
Find out how much you need to pay by using our stamp duty calculator below:
For a quick view of how savings vary by region, take a look at our useful breakdowns here.
The figures behind the calculations
If you buy a property before 31st March 2021 (when the stamp duty holiday ends)
You’ll need to complete your purchase to be eligible, but it will mean that you don’t need to pay stamp duty on the first £500,000 of the property price. If the property you are buying is under this amount, then you will not need to pay any stamp duty. If the property is over £500,000 you will still be eligible to pay stamp duty on the remaining amount at the following rates:
If this will be your only home (either because you’re a first-time buyer or because you’re selling an existing home):
| Property or lease premium or transfer value | Stamp Duty Rate |
|---|---|
| Up to £500,000 | Zero |
| The remaining amount £500,001 to £925,000 | 5% |
| The remaining amount £925,001 to £1.5 million | 10% |
| The remaining amount above £1.5 million | 12% |
If this will be an additional home or property that you own, the stamp duty rates are slightly different:
| Property or lease premium or transfer value | Stamp Duty Rate |
|---|---|
| Up to £500,000 | Up to 3% |
| The remaining amount £500,001 to £925,000 | 8% |
| The remaining amount £925,001 to £1.5 million | 13% |
| The remaining amount above £1.5 million | 15% |
If you buy a property on or after 1st April 2021
Once the stamp duty holiday has finished, the thresholds for tax due will be lowered, meaning that the cost of stamp duty will increase again.
It’s too early to know whether the government will want to return to the same levels pre-holiday or whether they’ll introduce further measures to help home-overs save money, however, our calculator uses the pre-holiday figures as this is the most likely outcome of what will happen when we reach 31st March 2021 and the stamp duty holiday ends.
If you are a first-time buyer, buying a property for the first time:
| Property or lease premium or transfer value | Stamp Duty Rate |
|---|---|
| Up to £300,000 | Up to 0% |
| The remaining amount £300,001 to £500,000 | 5% |
| The remaining amount £500,001 to £925,000 | 5% |
| The remaining amount £925,001 to £1.5million | 10% |
| The remaining amount above £1.5 million | 12% |
If you are a home-mover, selling an existing property in order to buy your new one:
| Property or lease premium or transfer value | Stamp Duty Rate |
|---|---|
| Up to £125,000 | Zero |
| The remaining amount £125,001 to £250,000 | 2% |
| The remaining amount £250,001 to £925,000 | 5% |
| The remaining amount £925,001 to £1.5m | 10% |
| The remaining amount above £1.5 million | 12% |
If you are keeping an existing property you already own, making the new property an additional one:
| Property or lease premium or transfer value | Stamp Duty Rate |
|---|---|
| Up to £125,000 | 3% |
| The remaining amount £125,001 to £250,000 | 5% |
| The remaining amount £250,001 to £925,000 | 8% |
| The remaining amount £925,001 to £1.5m | 13% |
| The remaining amount above £1.5 million | 15% |
