The government announced in July 2020 that, in England, stamp duty would not be paid on the first £500,000 of the purchase price of property, where the sale was completed by 31 March 2021. This was then extended until 30 June 2021 and then again until 30 September 2021. During the latter period, stamp duty was not payable on the first £250,000 of the purchase price. Similar stamp duty tax cuts were introduced in Scotland and Wales.
From 1 October 2021, stamp duty will return to its pre COVID level, which means that all purchases of property above £125,000 (apart from for first-time buyers) will attract the tax.
Rates will be as follows from 1 October 2021:
- Up to £125,000 – no stamp duty
- £125,001 to £250,000 – 2%
- £250,001 to £925,000 – 5%
- £925,001 to £1.5 million – 10%
- Above £1.5 million – 12%
For first-time buyers, the rates will be:
- Up to £300,000 – no stamp duty
- £300,001 to £500,000 – 5%
- For properties above £500,000, rates will be as above
If you are not replacing your main residence and you are buying an additional property, such as a holiday home or buy to let, that results in you owning more than one property, you will pay an extra 3% on top of the standard stamp duty rates, so you will pay:
- Up to £125,000 – 3%
- £125,001 to £250,000 – 5%
- £250,001 to £925,000 – 8%
- £925,001 to £1.5 million – 13%
- Above £1.5 million – 15%
Whilst the tax cut has certainly helped to boost the housing market, with house prices up by 13% since the beginning of the pandemic 18 months ago (according to Nationwide Building Society), other factors, such as the desire for more space, low interest rates and demand outstripping supply, are likely to keep the housing market buoyant.
Author: Caroline Murray, partner and head of Graysons’ conveyancing team