When it comes to selling your home, there are a number of fees which you need to be aware of. Stamp duty is one of them. Due to all that is going on around the world, the UK housing market has seen a dip due to people not being able to afford the extra money on various taxes. This caused the government to introduce a stamp duty holiday to boost the housing marketing. In our latest article, Norwich Home Buyers take a look at how the stamp duty holiday can help you.
What Is Stamp Duty?
Stamp duty is the tax that buyers have to pay when they purchase a home or even a piece of land over the price of £125,000. The charge in which you are liable for does rise in increments depending on the price of what you pay. This structure looks like the following:-
- Up to £125,000 = 0%
- From £125,001 – £250,000 = 2%
- From £250,001 – £925,000 = 5%
- From £925,001 – £1.5m = 10%
- Above £1.5m = 12%
Outside of this incremental scheme, first time buyers are not liable to pay stamp duty on their home as long as it falls below £500,000. However, if you are buying an additional property as we will mention later, you are liable to pay anything from an extra 3% up to 15%. Make sure if you are buying a new home to ensure that you have the necessary funds to pay for your stamp duty.
Why Is There A Stamp Duty Holiday?
Since April, not long after the countrywide lockdown the housing market has been in decline. This is mainly due to a loss of jobs and also people not being able to afford to move due to associated costs. This prompted the chancellor to announce a stamp duty holiday. We will look at what this holiday means in the next part of the article.
The theory behind this is that by giving potential buyers a tax break, this may prompt them to look for a new home, or continue with their plans in which they had before lockdown. The way in which it has been worded shows that it is not a permanent change, more of a way to get the wheels turning on the housing market.
The stamp duty holiday also does help a number of people within the property chain. From new buyers to estate agents and even to developers. By encouraging people to move home, buyers are able to push on with plans. Estate agents are likely to stay in their jobs reducing unemployment. And developers are able to generate revenue from the homes they have built.
How Does The Holiday Work?
The main part of the stamp duty holiday is that buyers will now not be liable to pay any stamp duty up to a home value of £500,000. This would work out at the top end buyers will save around £15,000. The new stamp duty threshold will look as follows:-
- Up to £500,000 = 0%
- From £500,001 to £925,000 = 5%
- From £925,001 to £1.5m = 10%
- Above £1.5m = 12%
The holiday at this current moment does not have an end date, however is not in place as a permanent fix. The stamp duty holiday does not change anything for first time buyers, however for the benefit of those that are looking to move who already own a home this saving could be used against other costs that you may incur.
Does It Include Buy-To-Let?
Unfortunately when the announcement was made, there was an omission by the chancellor when it comes to buy-to let properties. When you do purchase a second home alongside your main residence, you are liable to pay stamp duty starting at 3% rising up to 15% due to a banding structure. Buy-to-let individuals will still benefit from a reduction in their SDLT bill which will work out to be more than a third.
If you are looking to move home, or have considered it then our guide on how the stamp duty holiday can help you should give you some confidence. By not having to pay stamp duty on homes up to the value of £500,000, many will save around £15,000 in taxes. This could be the extra money needed for solicitors, surveyors and other moving costs.
If you would like some more information on the local market, or how the stamp duty holiday works then contact Norwich Home Buyers for more information.