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Stamp Duty can add tens of thousands to the costs of moving home, but new changes mean many people won’t have to pay it. Since July, there has been a Stamp Duty holiday which has been brought in temporarily to get the housing market going again after lockdown. When does Stamp Duty holiday end?
What is Stamp Duty?
Stamp Duty Land Tax is a payment you must make if you buy a property or land over a certain price in England and Northern Ireland.
In Scotland you have to pay Land and Buildings Transaction Tax, and in Wales it’s the Land Transaction Tax.
Stamp Duty Land Tax is normally paid when you:
- buy a freehold property
- buy a new or existing leasehold
- buy a property through a shared ownership scheme
- are transferred land or property in exchange for payment, for example you take on a mortgage or buy a share in a house
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Buyers must pay it when buying a home or piece of land worth £125,000 or more in England or Northern Ireland.
The rates vary depending on how much the house is.
If it’s worth between £125,001 and £250,000 you pay two percent of its value.
If the house is worth between £250,001 and £925,000 you pay five percent.
Houses worth between £925,000 and £1.5 million will set you to pay an extra 10 percent in Stamp Duty Tax.
Anything above £1.5 million will cost you an extra 12 percent in the tax.
First-time buyers don’t have to pay Stamp Duty on the first £300,000 as long as the home doesn’t cost more than £500,000.
If you’re buying an additional property on top of your first for £40,000 or more, you’ll have to pay an extra three percent of Stamp Duty on top of regular rates.
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What is the Stamp Duty Holiday?
The Stamp Duty threshold was raised in July to prevent nearly nine in 10 people from paying Stamp Duty.
Chancellor Rishi Sunak raised the threshold in a bid to encourage people to buy homes, boost the housing market, and create work for people in the industry.
Now, buyers only start to pay Stamp Duty on properties above £500,000 in England and Northern Ireland.
This has cut the average transaction down by about £4,500, and August saw the highest monthly price rise in over 16 years.
In fact, the property market is still booming.
Similar cuts have been made to the Scottish and Welsh equivalent of the tax.
For people buying their first home or moving home, the holiday rates are:
- Up to £500,000: 0 percent
- From £500,001 to £925,000: 5 percent
- From £925,001 to £1.5m: 10 percent
- Above £1.5m: 12 percent
When does Stamp Duty holiday end?
People in England and Northern Ireland have five months to benefit from the holiday.
The Stamp Duty holiday ends on March 31, 2021.
Anyone buying a home before then will not be charged Stamp Duty on a main residence costing up to £500,000.
Properties costing more than this will only be taxed on their value above that amount.
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