Budget 2021: Stamp duty holiday extended in England and Northern Ireland

In temporary measures brought in last July to help boost homebuying during the pandemic, homebuyers were told that until April 2021 they did not need to pay stamp duty on the first £500,000 of a property's purchase price if buying a main residence.

Now, after intense pre-Budget speculation, the Chancellor has announced that the stamp duty holiday will continue until 30 June 2021. After that, the point at which you start paying stamp duty will be reduced to £250,000 – double the normal level – until the end of September. From October, stamp duty will return to normal, with the point at which you start paying set at £125,000.

For more on how stamp duty works and what the current holiday means for you, see our Stamp Duty Calculator.

The stamp duty you pay depends on the property price and when you buy

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. Here's how rates are changing if you're buying a property as your main residence in England and Northern Ireland:

• For purchases completed by 30 June, the current stamp duty holiday remains in place. So you'll pay:

  - Nothing on properties purchased for up to £500,000

  - 5% on the portion between £500,001 and £925,000

  - 10% on the portion between £925,001 and £1,500,000

  - 12% on the portion costing more than £1,500,001

• For purchases completed between 1 July and 30 September, there'll be some relief. So you'll pay:

  - Nothing on properties purchased for up to £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

• For purchases completed from 1 October onwards, the stamp duty returns to normal. So you'll pay:

  - Nothing on properties purchased for up to £125,000

  - 2% on the portion 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

It's worth noting that for properties costing more than £500,000, the stamp duty holiday hasn't changed the bands above £500,000, but you'll still make a saving of £15,000 on the first £500,000. So if you buy a £600,000 property for example, while the holiday's on you'll pay just £5,000 stamp duty (5% of the £100,000 above the threshold) rather than the standard £20,000.

While the stamp duty holiday has prompted a surge in homebuying during the pandemic, it has also driven up house prices – according to figures released by Nationwide this week, average prices are up 6.9% year-on-year. So while you may pay less in stamp duty when purchasing a home, this may be partially offset by the price of the home itself. 

The rules for first-time buyers are normally different

If you're a first-time buyer in England or Northern Ireland, then the stamp duty rules normally work differently – though until 30 June 2021, as with other buyers, you won't pay any stamp duty on the first £500,000 of a property's purchase price.

From 1 July 2021 onwards, the normal rules for first-time buyers will return – these are that you don't have to pay any stamp duty on the first £300,000 of a purchase.

It's also worth noting that if you already own a home and buy an additional property worth more than £40,000, a 3% levy applies – both currently and when the stamp duty holiday ends.

Tax on home purchases works differently in Scotland and Wales

In Scotland and Wales, there are different systems – you pay land and buildings transaction tax in Scotland, and land transaction tax in Wales.

Those buying properties in Scotland and Wales aren't affected by today's announcement, but there are separate reductions in transaction tax in place in both countries currently – until 31 March 2021, buyers don't pay tax on the first £250,000 of a purchase (normally the threshold's £145,000 in Scotland and £180,000 in Wales). We're checking with the devolved administrations if any extensions to the 31 March 2021 deadline are planned and will update this story when we hear back.