The announcement raises the threshold at which tax duty is paid from £125,000 to £500,000 meaning buyers of properties in England below this threshold will pay no SDLT on purchases that take place until March 31st 2021.
The measure applies to transactions that are completed or substantially performed between July 8th 2020 and March 31st inclusive.
The plans form part of a wider package of measures designed to boost economic growth and jobs.
The Government estimates that the changes mean nine in ten buyers will pay no SLDT on a house purchase.
So if you are a first-time buyer or buying a property over £500,000 we will now take you through everything you need to know.
What is stamp duty and who pays it?
Stamp Duty Land tax is a levy paid to HM Revenue and Custom when you are buying a home.
It is paid by the person who is buying the property, how much you are paying and whether or not it is your only home. It is not paid by the seller. Usually, your solicitor pays this as part of the sale process.
How much is stamp duty?
The rate of stamp duty you pay depends on what price threshold your property falls into, and where the property is (there are different rates in Scotland and Wales compared to England and Northern Ireland.) It also depends on whether you qualify for stamp duty relief as a first-time buyer
Since April 2016 there has been a stamp duty surcharge for anyone buying additional properties. If at the end of the purchase process you will own two or more homes then you have to pay a 3% stamp duty rate on top of your ordinary stamp duty bill on properties over £40,000.
Stamp duty does not apply to caravans, mobile homes or houseboats.
What are the new Stamp Duty rates?
So for example, if you are purchasing a property valued at £600,000 before July 8th you would have paid £20,000, you will now pay £5,000 a saving of £15,000.
A property valued at £700,000 would have previously paid £25,000, the new rate will be £10,000 also saving £15,0000
Take a look at the following property we are selling and the potential tax duty saving
27, Hall Rise
A potential saving of £12,000
How do I work out what my new stamp duty rate would be? Simply access https://www.stampdutycalculator.org.uk/
Can I add stamp duty to my mortgage?
If you can’t afford your stamp duty bill, then you do have the option to borrow more on your mortgage to cover the tax bill. You simply need to calculate how much stamp duty you will owe and increase your mortgage borrowing to cover it.
Just be aware that you will pay interest on that extra borrowing and also that adding stamp duty to your mortgage could mean you end up with a higher interest rate if it pushes your loan to value up significantly
How do I pay stamp duty?
You have 14 days after you complete on the purchase of the property to file a return to HMRC and pay stamp duty that is due.
Your solicitor or conveyancer will usually calculate and pay your stamp duty bill on your behalf – this will normally take place on completion day
A comment from David Phillip
David Phillip said “we very much welcome the Chancellor’s announcement, these measures will enable people who are looking to buy a home to have the confidence and stability to be able to move forward with their purchase. The savings will also have a knock-on effect to the wider market as people buy furniture and white goods for their new home.
Since the announcement last week we have seen an increase in buyers acknowledging the fact that if they are able to complete within the time frame they will benefit from a huge reduction or elimination in the payment of stamp duty”
Now is an excellent time to take advantage of the new Stamp Duty rules, if you have any questions around stamp duty or are looking to sell your home and would like a free market appraisal call David Phillip Estate agents on 01134 676 4000
w davidphillip.co.uk
a: 86, Leeds Road, Bramhope, Leeds.
