Almost 90% of homebuyers will benefit from 0% stamp duty after Chancellor, Rishi Sunak, raised the threshold at which stamp duty kicks in to £500,000 compared to the previous £125,000 threshold.
Often referred to as one of the nation’s most hated taxes, The Chancellor has slashed stamp duty to help people move home and to kickstart the housing market after a coronavirus induced slump. Some could save up to £15,000 in tax, until the duty goes back to normal on the 31st March 2021.
Under the new guidelines, the following rates apply:Property or lease premium or transfer value / SDLT rate
Up to £500,000 / 0%
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%
Previously, stamp duty kicked in at 2% above £125,000, before rising to 5% above £250,000.
Buy-to-let investors and those purchasing second homes will still face a surcharge at all levels including the standard 0% band, meaning their bills will start at 3% up to £500,000.
The greatest benefit is to those who would have faced the biggest tax bills on homes at £500,000 or above, who will save the full £15,000, while the average saving is thought to be around £4,500.
First-time buyers purchasing homes valued at £300,000 or less will continue to pay no stamp duty too.
What is stamp duty?
Stamp duty is a land tax that must be paid when an individual purchases a property or a piece of land for a certain amount of money.
The cost of stamp duty is dependent on the overall price of the property and the type of property being purchased. For example,whether it is residential, it is non-residential, mixed-use or whether you are a first-time buyer.
Kicking the housing market back into gear
The economy as a whole has suffered over the last couple of months, including the housing market, so this reduction in stamp duty will no doubt help people who are looking to buy homes on the lower end of the market.
If you’re looking for a mortgage we can help. We’re independent mortgage brokers in Manchester who can help you get the very best deal on your mortgage. Now that stamp duty has been temporarily reduced it’s a fantastic time to buy a property so don’t miss out!