Bennison Brown | What is stamp duty and how do the new rules affect…

What is stamp duty and how do the new rules affect you

An update on stamp duty

The Chancellor, Rishi Sunak, has announced there will be no stamp duty tax on all property purchases, up to £500,000. This positive news is expected to boost the economy and housing market following the Covid-19 crisis and lockdown restrictions.

What is stamp duty?

Before the announcement, if you purchased a property in England and Northern Ireland you were required to pay tax once your sale completes. For first time buyers, stamp duty was payable if your property costs more than £300,000. If you moved home, you would be taxed on any property costing more than £125,000. For £500,000+ properties, you would be expected to pay the same as a home mover.

What are the new rules?

The threshold has now increased and the new rates will be in place until 31st March 2021. Those purchasing second homes or buy-to-let properties also benefit however, the pre-existing 3% surcharge do still apply.

The table below shows the percentage of stamp duty you will pay, according to the property value.

Property value

Stamp Duty Rate %

Up to £500,000

0

£500,001 - £925,000

5%

£925,001 - £1.5 million

10%

£1.5 million+

12%

By raising the threshold to £500,000, it provides the whole housing market an immediate window of opportunity.

Taking advantage of this opportunity could save buyers thousands of pounds, as Rishi Sunak suggests nine out of ten people buying their main residence will no longer be subject to the tax.

The change massively affects first time buyers, especially those looking to buy in the more expensive regions of London and the South-East. If the property you are buying costs more than £500,000 you could save as much as £15,000.

Purchasing a property is one of the biggest financial decisions you will make, so it’s important that you get it right first time. We have a team of experienced whole of market mortgage brokers available at a time that suits you. They will research the whole market to ensure you secure the best deal for your circumstances.

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