Yesterday (8 July 2020) the good news came from Chancellor Rishi Patel: homebuyers won’t have to pay stamp duty on their purchases up to the first £500,000 until 31st March 2021.
Only 24hrs ago if you were thinking of buying a property under the half million mark you would have paid taxes on any amount over £125,000 (or over £300,000 for first-time buyers in London). For the next 8 months, until March of next year, homebuyers could save up to £15,000.
It's worth noting that the additional 3% rate for purchases of additional dwellings does still apply, on top of revised standard rates.
Here is how it worked before the announcement: property owners didn’t pay any stamp duty on the first £125,000 of the total price.
They then had to pay 2 per cent between £125,001 and £250,000.
5 per cent between £250,001 and £925,000.
Between £925,001 and £1,500,000 it was 10 per cent.
And over £1,500,001 would have been 12 per cent.
This is of course welcome news among homebuyers and property investors who are now looking at savings up to £15,000.
But how does it work in practice?
Fist time buyers buying a £500k property in London:
Prior 8th July 2020 they would have paid £10,000 tax.
From today up to the end of March 2021 they would pay £0.
Buyers purchasing their second home (without retaining their previous one) at £500,000:
They would have paid £15,000 tax.
From today up to the end of March they would pay £0
Buyers purchasing an additional property:
While they would have paid £30,000 tax prior the introduction of the new rates, they would pay now £15,000.
You can use the table below to calculate your Stamp Duty:
Up to £500,000 Zero
The next £425,000 (the portion from £500,001 to £925,000) 5%
The next £575,000 (the portion from £925,001 to £1.5 million) 10%
The remaining amount (the portion above £1.5 million) 12%
The following rates still apply to additional purchases:
SDLT rate (additional properties)
Up to £500,000 3%
The next £425,000 (the portion from £500,001 to £925,000) 8%
The next £575,000 (the portion from £925,001 to £1.5 million) 13%
The remaining amount (the portion above £1.5 million) 15%
Please don’t hesitate to contact us should you need any further information.
More than happy to assist.
Alex & Matteo