If you’re looking to make the most of the Stamp Duty holiday, you might want to get a wiggle on.

Although the deadline at the end of March is still a little way off, buying a house — especially if you’re selling too — can take time and might make you miss out on saving a pretty penny on Stamp Duty.

What is the Stamp Duty holiday?

Ordinarily when you buy a property you have to pay what is called Stamp Duty Land Tax (SDLT), also known as Stamp Duty. (The tax is called Land and Building Transaction Tax in Scotland and Land Transaction Tax in Wales.)

Earlier this year, the government announced that properties worth less than £500,000 bought between 8th July 2020 and 31st March 2021 will not incur any Stamp Duty costs. (Buy-to-let properties will still have to pay Stamp Duty, but at a reduced rate.)

This Stamp Duty holiday was introduced to boost the economy following the impact of Covid-19.

That means that if you’re buying a residential property, and it’s going to be the only home you own, worth less than £500,000 — whether you’re a first time buyer or moving home— you could save up to £15,000 in Stamp Duty if you complete the purchase before the end of March.

So, as the Stamp Duty holiday may be the only holiday you’ll get this year, it’s definitely worth making the most of, if you can.

When do you normally pay Stamp Duty?

You usually pay Stamp Duty when you:

  • Buy a freehold property
  • Buy a new or existing leasehold
  • Buy a property through a shared ownership scheme
  • Transfer of land in exchange for payment (i.e mortgages or buying shares in a house)

Stamp Duty applies to all properties over £125,000, although first time buyers don’t have to pay Stamp Duty on the first £300,000.

How is Stamp Duty calculated?

Stamp Duty is normally calculated on a sliding scale based on the value of the property you’re buying and whether it’s your first home, your next home or you’re buying it to rent out.

However, as a rule of thumb, the more expensive the property, the more you’ll pay in Stamp Duty.

Because it’s calculated on a sliding scale, it can get quite complicated to work out how much you need to pay, especially if you’re buying a property that spans two brackets and you need to work out 2% of the first £250,000 and 5% of the rest.

To make it easier, we’ve built a handy stamp duty calculator that does all of the hard work for you.

What are the current Stamp Duty rates that end on 31st March 2021?

 

Buying your first property? Moving home? Buying to let?

If you’re buying in England or Northern Ireland

Stamp Duty Land Tax (SDLT)

You won’t have to pay SDLT if your new property is worth less than £500,000.

You’ll have to pay 5% on the next £425,000

Then 10% on the next £575,000

And 12% on everything over £1.5 million.

You won’t have to pay SDLT on property worth less than £500,000

You’ll have to pay 5% on the next £425,000

Then 10% on the next £575,000

And 12% on everything over £1.5 million.

You’ll have to pay a reduced rate of 3% on all properties worth less than £500,000.

You’ll have to pay 8% on the next £425,000.

Then 13% on the next £575,000.

And 15% on everything over £1.5 million.

If you’re buying in Scotland

Land and Building Transaction Tax (LBTT)

You won’t have to pay LBTT on property worth less than £250,000

You’ll pay 5% LBTT on the next £75,000

Then 10% LBTT on the next £375,000

And 12% LBTT on anything over £750,000

You won’t have to pay LBTT on property worth less than £250,000

You’ll pay 5% LBTT on the next £75,000

Then 10% LBTT on the next £375,000

And 12% LBTT on anything over £750,000

You’ll benefit from the LBTT holiday up to £250,000 but you will have to pay an Additional Dwelling Surcharge (ADS) of 4%.

You’ll pay 5% LBTT and 9% ADS on the next £75,000

Then 10% LBTT and 14% ADS on the next £375,000

And 12% LBTT and 16% ADS on anything over £750,000

If you’re buying in Wales

Land Transaction Tax (LTT)

You won’t have to pay LTT on property worth less than £250,000

5% on the next £150,000

7.5% on the next £350,000

10% on the next £750,000

12% on everything over £1.5 million

You won’t have to pay LTT on property worth less than £250,000

5% on the next £150,000

7.5% on the next £350,000

10% on the next £750,000

12% on everything over £1.5 million

The first £40,000 is exempt from the LTT.

You’ll pay 3% on the next £140,000.

You’ll pay 6.5% on the next £70,000.

You’ll pay 8% on the next £150,000

You’ll pay 10.5% on the next £350,000.

You’ll pay 13% on the next £750,000.

And you’ll pay 15% on anything over £1.5 million.

“How much could I save in Stamp Duty?”

To give you a rough idea of how much you could save by making the most of the holiday, we’ve put together this handy table that breaks things down how much you could save if you bought a property in England.

(How much you save might vary if you buy a property in Scotland or Wales.)

Property Value First Time Buyers Home Movers Buy-to-let
£100,000 No Saving No Saving £3000
£200,000 No Saving £1500 £7500
£300,000 No Saving £5000 £14,000
£400,000 £5,000 £10,000 £22,000
£500,000 £1000 £15,000 £30,000

Why the hurry?

Like all good holidays, the Stamp Duty holiday will come to an end soon, and if you want to end this one with more than a stick of rock and novelty fridge magnets, you’ll need to get a move on.

To really make the most of the holiday, you need to get started as soon as you can as buying and selling properties can take much longer than you’d think.

In fact, according to a study by Legal and General, the time it takes to buy a home is usually at least 15 weeks.

Before the pandemic, 61% of buyers in simple cases took two weeks to receive their mortgage offers.

Since the lenders started offering mortgages again, even simple cases have taken up to four weeks to process, leaving you with even less time to finalise everything before 31st March.

Could it take longer than 15 weeks?

Anyone applying that has a more complex background, such as a less-than-perfect credit score or those that have been on furlough will probably have to wait a little longer to secure a mortgage offer.

It’s also worth bearing in mind that Christmas isn’t far off and with another national lockdown possible, there may be delays and hiccups that cause the process to take even longer.

What if I miss the deadline?

With things taking a little longer at almost every stage of the buying process, it’s likely that some buyers will miss the deadline.

If that happens then it is more than likely that you’ll have to pay the Stamp Duty. Unless things change, on April 1st 2021, the thresholds will revert to the same rates as before the holiday.

However, if you’re a first time buyer and you’re buying a property worth less than £500,000 you’ll still be able to get a discount that means you’ll pay less or no Stamp Duty.

It’s time to get moving

Even with five months left until the Stamp Duty holiday deadline, it’s time to get moving. If you’re a first time buyer and haven’t already started searching for your perfect first home then now is the time to start trawling Zoopla and Rightmove.

If you’ve already found the perfect property, whether it’s your first home, your next place or an extra property then our qualified and friendly advisors are on hand to go through thousands of deals and find one for you that ticks all of your boxes.

Using a mortgage broker like us will help you save time and money as well as giving you access to a wider range of mortgages.

Not only that, but we’ll take care of the application paperwork and know which lenders will process your application fastest which could make all the difference with the Stamp Duty deadline fast approaching.

To get a quick quote or speak to one of our advisors, head to our mortgage calculator.

All information provided above is based off our own understanding of the current SDLT holiday. We would always recommend getting in touch with a tax adviser for the latest and most up to date guidelines.

Personal Loans

Fast quote and free advice.

Call me back

Categories

Categories

Personal Loans

Homeowner Loans

Mortgages

Remortgages

Buy to Let Loans

Bridging Loans

Development Loans

Credit Help

Loan.co.uk Blog