Homebuyers won't pay stamp duty on properties up to £500,000 until next April
Homebuyers won't pay stamp duty on the first £500,000 of a property's purchase price, in a temporary measure announced by the Chancellor today.
At the moment, the threshold where you start paying stamp duty in England and Northern Ireland is £125,000, or £300,000 for first-time buyers (if buying a property worth less than £500,000).
But Chancellor Rishi Sunak has announced that this will be temporarily raised to £500,000 from today (Wednesday 8 July) until 31 March next year in England and Northern Ireland, as part of his economic statement delivered today.
The Treasury says nine out of 10 people getting on or moving up the property ladder (or downsizing) this year will pay no stamp duty as a result.
Use our stamp duty calculator to see how much stamp duty you will now have to pay. Also see our Mortgages & Homes section for more help, including our Remortgage Guide, First-Time Buyers' Guide and Mortgage Best Buys Calculator.
Martin: 'This is a huge change'
As well as unveiling the stamp duty change, the Chancellor also announced that the Government will offer 50% off discounts on eating out in August, and vouchers of up to £5,000 for homeowners to make energy-efficiency improvements.
Here's Martin's reaction to the announcements:
What is stamp duty and how much does it cost?
Stamp duty land tax is a lump-sum tax that anyone buying a property or land costing more than a set amount has to pay.
The rate you'll pay varies based on the property price and type. Under the current system in England and Northern Ireland (where the changes apply), if you're buying a property as your main residence you'll pay:
- Nothing on properties purchased for up to £125,000
- 2% on the portion of a property between £125,001 and £250,000
- 5% on the portion between £250,001 and £925,000
- 10% on the portion between £925,001 and £1,500,000
- 12% on the portion costing more than £1,500,001
If you're a first-time buyer in England or Northern Ireland buying a property for up to £500,000, you already don't pay stamp duty on the first £300,000 and pay 5% on any portion between £300,001 and £500,000 (if your property's worth more, the normal rules apply).
But for now, no one will pay stamp duty when buying a main home worth up to £500,000.
For properties costing more than £500,000, the stamp duty bands above £500,000 are unchanged – however, you will still make a saving of £15,000 on the first £500,000. So if you bought a £600,000 property for example, you'd pay £5,000 stamp duty (5% of the £100,000 above the threshold) - before the changes were announced, you'd have had to pay £20,000.
The 3% levy paid if you already own a home and are buying an additional property worth more than £40,000 still applies (though you'll still pay less than you would due to the raised threshold).
In Scotland and Wales, it works differently – you'll pay land and buildings transaction tax in Scotland, and land transaction tax in Wales. Those buying properties in Scotland and Wales aren't included in today's announcement.
How much will buyers save?
How much a buyer in England or Northern Ireland could save under the temporary measure will depend on how much the property costs – as a general rule, the more expensive the property, the more you'll save (up to the maximum of £500,000).
For example, if you buy a property for £400,000 in England and you're not a first-time buyer, you would usually pay £10,000 (made up of £2,500 on the portion between £125,001 and £250,000, and £7,500 on the portion between £250,001 and £400,000).
But for now, you'd pay no stamp duty on the property at all – saving you £10,000.
The Chancellor has said the average saving will be £4,500.
What if I've exchanged but not completed?
The requirement to pay stamp duty is triggered when you complete the purchase of the property. So if you've exchanged before today (Wednesday 8 July), but haven't completed, you'll benefit from the increased thresholds.