When is The Stamp Duty Deadline? – Griggs Homes

When is The Stamp Duty Deadline?

The stamp duty deadline ends on 31st March 2021 - and this comes with new implications for overseas buyers, first-time buyers and those buying a second property.

What is Stamp Duty?

Stamp Duty, or Stamp Duty Land Tax is the tax incurred when buying a property or piece of land costing more than a certain value. The specific amount of Stamp Duty varies based on the property type, price of the property and the location.

Stamp Duty Holiday

Historically, when you bought a property, you had to pay Stamp Duty Land Transaction Tax on all properties worth more than £125,000. This value was £300,000 for first-time buyers. However, Chancellor of the Exchequer, Rishi Sunak, announced a temporary Stamp Duty holiday this summer.

The action was taken as a result of the coronavirus pandemic, hoping to give a boost to first-time buyers and reignite the frozen property market - helping first-time buyers and property developers in the process.

The UK experienced a four-month consecutive fall in house prices during the early days of the pandemic. Subsequently, the government introduced the tax holiday. This meant that there was a zero per cent Stamp Duty for all properties worth £500,000 or under from the 8th July 2020 to March 2021.

Stamp Duty Until March

  • Until 31st March 2021, the Stamp Duty rate for properties worth £0 to £500,000 is 0%.
  • Between £500,001 and £925,000 you will pay a 5% Stamp Duty.
  • For properties worth between £925,001 and £1.5m you will pay a 10% Stamp Duty, and anything over £1.5m will incur a Stamp Duty of 12%.

For example, if you are buying a property with a value of £400,000 before March 31st, you will pay a Stamp Duty of £0 - a value which would have previously been £10,000. The higher the property price, the higher the rate of pay within a certain tax bracket. Allowances have also been made for purchasers of additional properties. When buying-to-let during the Stamp Duty holiday, investors can enjoy a new rate of only 3% Stamp Duty for properties up to £500,000.

Stamp duty

There is currently 0% stamp duty on any properties purchased between £0 to £500,000 - and the deadline for this is on 31st March 2021

How Much Are People Saving Because of the Stamp Duty Cut?

The Stamp Duty holiday had a huge impact on those buying a property this year with an estimated 9 out of 10 people buying their main property with no Stamp Duty at all. The average saving was thought to be about £4,500 per purchase. However, there is the worry that people sped up their plans to move in order to take advantage of the tax holiday. This, in turn, could lead to a slump when the Stamp Duty is reintroduced from April of 2021.

How Much Stamp Duty Will You Pay After March?

From the 1st April 2021, the price thresholds will change to how they were previously (before 8th July 2020). This means that for residential properties, the Stamp Duty threshold will be £125,000 and for non-residential properties and land, the threshold will be £150,000.

There are some allowances made for first-time buyers in the form of a small tax discount. You can pay less or no tax if you, or your buying partner, are first-time buyers, and if the purchase price is below £500,000. The Stamp Duty holiday has caused an unparalleled surge in housing prices. Thus, when it ends, experts predict that house prices may fall back down.

What is the Stamp Duty Surcharge?

Additionally, from 1st April 2021, a new 2% Stamp Duty surcharge will be implemented for overseas buyers when purchasing residential property in England and Northern Ireland. This is thought to be applied both to companies and individual purchasers.

The new 2% charge will be in addition to the preexisting 3% Stamp Duty surcharge incurred on additional properties. There is also a 15% flat Stamp Duty rate when making company purchases or properties worth more than £500,000 and, of course, the regular Stamp Duty rates for UK home buyers.