Chancellor Rishi Sunak has announced that the stamp duty threshold has been raised to £500,000.

What is Stamp Duty?

Stamp duty is a tax paid when buying a property in England or Northern Ireland. Also known as Stamp Duty Land Tax, there are several rate bands that dictate the overall cost of stamp duty. Until 8^th July 2020, homebuyers would be expected to pay stamp duty on properties bought for more than £125,000, with further relief offered to first-time buyers up to £300,000.

In Scotland, Land and Building Transaction tax is paid and in Wales it’s Land Transaction Tax.

What has changed?

Previously, buyers would expect to pay no stamp duty on a property valued up to £125,000, or £300,000 for first-time purchases- but Chancellor Rishi Sunak has announced that this has been raised to £500,000.

This change will be temporary but will take effect immediately, applying from 8^th July 2020 and will last until 31^st March 2021. This temporary holiday on stamp duty is to support buyers that have been financially impacted by the pandemic, boosting the property market and giving more people the opportunity to afford their first home.

This means if you buy a main property for up to the value of £500,000- you won’t need to pay stamp duty. Any properties above this value will be subject to stamp duty, but at the rate relative to the value of the home.

Sunak announced during the Summer Economic Update that: “The average stamp duty bill will fall by £4,500. And nearly nine out of 10 people buying a main home this year, will pay no stamp duty at all.”

Second home owners and buyers looking to purchase buy-to-let properties will also see benefits from the stamp duty holiday, but will still need to pay the additional 3% stamp duty.

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