When you buy a property or land, you usually pay tax on it. While often referred to as stamp duty, that’s only the name in England and Northern Ireland – it’s different in Scotland and Wales, where it’s known as ‘land and buildings transaction tax’ and ‘land transaction tax’ respectively.
Since 2014, all the home nations have had a progressive stamp duty rate system. This means that instead of paying a single rate on the entire property price, depending on the cost of the property you’re buying you might end up paying one rate on a certain portion of the property and a different rate on another.
Buyers used to have 30 days to pay stamp duty, but new legislation reducing this to 14 days came into effect in March 2019. So, time is of the essence, and turning to cash house buyers could be the perfect way to go – the best part is that selling this way is quick-much quicker then when selling through estate agents.
The holiday is over
To help boost the property market by helping buyers whose finances were affected by Covid, a stamp duty holiday was introduced in July 2020. It meant a saving of up to £15,000 for people buying homes. This, now that the pandemic is waning, is no longer. If you’re looking to save money after what has been a tough year-and-a-half, Gaffsy is the cheapest way to sell your property, avoiding costs such as agents’ fees, estate agents’ charges, solicitors’ fees, clearance costs, utility charges, mortgage payments and cosmetic repair costs. Landlords and second-home buyers were also able to make use of the tax cut. But they still had to pay the extra 3% of stamp duty they were charged under the previous rules.
What has changed?
Since June 2020, buyers haven’t had to pay any stamp duty on the first £500,000 of their purchase price. However, from 1 July, stamp duty will kick in above £250,000 at the following rates:
£0-£250,000 = 0%
£250,001-£925,000 = 5%
£925,001-£1,500,000 = 10%
£1,500,000+ = 12%
From 1 October 2021, rates are due to return to normal. That means the point you to start paying stamp duty will revert back to £125,001:
£0-£125,000 = 0%
£125,001-£250,000 = 2%
£250,001-£925,000 = 5%
£925,000-£1,500,000 = 10%
£1,500,000+ = 12%
You should use the government’s Stamp Duty Land Tax (SDLT) calculator to find out how much you would pay. You need to have completed your property purchase by 30 September to benefit from the stamp duty holiday in its current format. If you exchange on or before 30 September, but complete after 30 September, you’ll have missed the deadline and will need to pay the normal rate of stamp duty.
Likewise, you needed to have completed by 30 June to have benefited from the stamp duty holiday in its £500,000 format. If instead you complete between 1 July and 30 September, no stamp duty will be due on the first £250,000 of a main residential property.
If you’re a first time buyer…
It can be confusing to work out how much stamp duty a first-time buyer needs to pay now that the stamp duty holiday has changed in some countries and ended in others. Here’s what each home nation requires of first time buyers:
In England and Northern Ireland
Since Thursday 1 July, there’s no stamp duty for first-time buyers on the first £300,000 of a main residential property (provided the property you’re buying costs £500,000 or less).
Since Thursday 1 July, first-time buyers pay no land transaction tax on the first £180,000 of a property.
Here, first-time buyer stamp duty rates reverted to their pre-coronavirus thresholds in April. This means that first-time buyers pay no land and buildings transaction tax on the first £175,000 of a property.
The crucial thing to know is that if you’re buying in England or Northern Ireland, you have 14 days from the date of completion/date of entry (when all the contracts are signed and dated, and you get the keys) to pay stamp duty or transaction tax. Luckily, if you choose a house cash sale company such as SellHouseQuickNow.co.uk, you can get your house valuation quickly, and complete on your house sale fast with no fees, meaning you won’t have to wait around for contracts and chains and so forth. Take longer, and you could face a fine and possibly interest on top, so don’t!