Stamp Duty Extension – What does this mean?
Chancellor Rishi Sunak has announced the extension to the Stamp Duty holiday today in his March Budget. This holiday will be extended by three months and will now end of 30th June 2021 as opposed to initial date of March 2021.
After this, the Government has introduced what it calls a ‘Smooth Return’ to normality. After the 30th of June 2021, the nil rate band for Stamp Duty will be double its normal level (£250,000 instead of £125,000) and will only return to the usual level from October 2021.
What actually is the Stamp Duty Holiday?
Stamp Duty is a tax you might have to pay if you buy a residential property or a piece of land in England and Northern Ireland. This tax applies to both freehold and leasehold properties – whether you’re buying outright or with a mortgage.
Mr. Sunak introduced the initial Stamp Duty holiday in 2020 to help stimulate Britain’s housing market which experienced a dip in activity during England’s first national lockdown. The idea was to incentivise potential home buyers by increasing the threshold at which stamp duty land tax is charged on homes from £125,000 to £500,000 – meaning savings of up to £15,000 could be made if buying at the £500,000 level as no tax is due. With the ‘Smooth Return’, this means that if you are unable to make the deadline of June 30th, the amount of Stamp Duty Land Tax that you pay will still be slightly reduced by raising the 0% threshold from £125,000 – £250,000.
Why is it being extended?
Property portal Rightmove recently revealed that 412,000 sales agreed in 2020 remain in the legal process. Ahead of the original 31st March deadline, around 100,000 of these sales were expected to be lost. The government are also estimating that by extending this holiday, an additional 300,000 transactions could now escape the tax, costing the treasury approximately £1.75bn.
If you would like to find out more about Stamp Duty Land Tax or have any questions about the local property market, please reach out to one of our property professionals on either 01279 898 383 or firstname.lastname@example.org.