The stamp duty holiday extension - what does it mean? Your Move explains.
The government has confirmed that the stamp duty holiday, originally introduced last year and which was due to end on 31 March 20201, is to be extended until 30 June 2021 and, in addition, there will be a phased approach to the reintroduction of the tax for properties under the value of £250,000.
Here’s a quick update to find out how the announcement might affect you as a buyer.
What is stamp duty?
Stamp Duty Land Tax has to be paid if you buy a freehold property, a new or existing leasehold property, a property through a shared ownership scheme or if you have land or property transferred to you in exchange for a payment i.e. a mortgage. The amount of tax payable depends on the value of the property or land being bought. Different taxes apply in Scotland and Wales. In Scotland you’ll pay Land and Buildings Transaction Tax and in Wales you pay Land Transaction Tax.
What is the stamp duty holiday?
The holiday was announced last July in an attempt to stimulate the property market following a fall in activity during the first Covid-19 lockdown. It means, for the first £500,000, no stamp duty is charged on a residential property. Before the holiday, tax would be payable for any property over the value of £125,000 – the amount being dependant on the value of the property.
What has the government just announced?
- The stamp duty holiday will be extended by three months until 30 June 2021.
- From 1 July 2021 – until 30 September, stamp duty will continue not to be payable on properties under the value of £250,000.
- From 1 October – the stamp duty will begin to apply for properties valued £125,000 and above.
What should I do, as a buyer?
If you have not yet started to purchase a property, it’s unlikely you will benefit from the stamp duty holiday extension as the amount of time it takes to complete a purchase often exceeds three months. If you are a cash buyer, however, there may still be a chance you could complete a purchase before the stamp duty holiday ends provided you find a property soon. At Your Move we’ve got lots of guides to help you as a buyer, a website full of properties, and teams more than willing to assist you.
As an existing buyer, there should be more time to complete your transaction and, hopefully, benefit from the stamp duty holiday. If you think you may miss the holiday, however, remember it’s important to consider not only the stamp duty element of your purchase – as a recent Your Move blog highlights.