Stamp Duty Holiday extended until 30th June 2021 – Will I have to pay any Stamp Duty?

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The Chancellor, Rishi Sunak has announced on 3rd March 2021 that the Stamp Duty holiday will be extended by three months and will now end on 30th June 2021.

Between 1st July and 30th September 2021 the nil rate band will be reduced to £250,000. Standard rates will apply from 1st October 2021. It’s welcome news for many who will now be able to take advantage of the savings they would have missed out on, despite agreeing sales many weeks ago. Lucy McCallum, Head of Residential Property Conveyancing has pulled together all the information you need to know after the Chancellor’s announcement in todays budget.

What is Stamp Duty and when will I have to pay it?

Stamp Duty is generally levied on completion of any transaction which involves an exchange of property for land and properties situated in England only. Separate rules apply for other parts of the UK. For transactions in England this includes:

  • Buying freehold property whether for your own residence or for a buy-to-let
  • Buying a new or existing leasehold property
  • Buying a share of a property through a shared ownership scheme
  • Having land or property transferred to you in exchange for payment, e.g. you take on a mortgage or buy a share in a house

A Stamp Duty return must be submitted for all land or property transactions valued at over £40,000 even if no duty is payable. The duty due (if any) must be paid to HMRC within 14 days of completion of the transaction. This is usually done by your conveyancer.

How does the Stamp Duty Holiday work?

The holiday was first introduced on 8 July last year, which meant that most buyers are exempt from paying any Stamp Duty provided they completed their purchase before 31 March 2021. This can result in savings of up to £15,000.

The Government have been under pressure to extend the Stamp Duty holiday to avoid thousands of transactions from falling through if they are unable to complete by the 31 March 2021 deadline and have now extended it to 30 June 2021.

If you are looking to buy your first home or move home, you won’t be charged Stamp Duty on the first £500,000 of the property being purchased as long as the property will be your only home.

If the purchase will result in you owning more than one property and you are not replacing your main residence, i.e. selling your current home at the same time as purchasing your new one, then the higher rate Stamp Duty levy of 3% extra will still apply.

The tables below show the current rates which will apply until 30th June 2021:

Buying your first or replacement home:

Property or lease premium or transfer value SDLT rate
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%

 

Buying an additional property:

Property or lease premium or transfer value SDLT rate
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%

 

What happens if I complete my house purchase after 30 June 2021?

If you are not able to complete your purchase by the new deadline of 30th June 2021, then the following nil rate bands will apply before Stamp Duty is payable:

  • The nil rate band of £500,000 will fall to £250,000 from 1 July 2021 until the end of September 2021.
  • It will then return back to the ‘normal’ of £125,000 on 1st October 2021.

 

For transactions completing after 30 September 2021 the following standard rates will apply as set out below:

Buying your first or replacement home:

Property or lease premium or transfer value SDLT rate
Up to £125,000 Zero
The next £125,000 (the portion from £125,001 to £250,000) 2%
The next £675,000 (the portion from £250,001 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%

 

Buying an additional property:

Property or lease premium or transfer value SDLT rate
Up to £125,000 3%
The next £125,000 (the portion from £125,001 to £250,000) 5%
The next £675,000 (the portion from £250,001 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%

 

What if I am a First Time Buyer?

From 1st July 2021, first time buyers purchasing a property up to £500,000 in value will be eligible for reduced Stamp Duty rates as set out below:

Purchase of a main residence SDLT rate
Up to £300,000 0%
The next £200,000 (the portion from £300,001 to £500,000) 5%

 

If buying a property for over £500,000 then you will not be able to claim the reduced rates set out above and the standard rates would then apply.

Things to consider

As the conveyancers are currently experiencing a high volume of work across the country as a result of the Stamp Duty holiday, transactions are generally taking longer than usual. If you are now only thinking about moving, you should therefore be prepared to pay the Stamp Duty payable after the holiday has ended.

Stamp Duty rules can be very complex as there are various factors that need to be considered in order to calculate the amount due and you should therefore consider obtaining specialist advice from a tax specialist

To find out more about our Residential Property Conveyancing Services you can view our web pages here. To get in contact please click here or submit an enquiry using the form on this page. Alternatively, you can call us on 01453 847200.


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