Extension of stamp duty holiday fuels home sales boom - Broke in London

Extension of stamp duty holiday fuels home sales boom

Guest post by Jana Abelovská

One of the announcements made in the 2021 Budget speech in March was that the stamp duty holiday was being extended for a further three months to the end of June.

Stamp duty is often complicated to calculate as individual circumstances can affect the brackets and amounts due. It’s not uncommon for stamp duty refunds to be issued after double-checking the amount due using a stamp duty refund calculator.

The reason why the stamp duty holiday was first introduced, was to stimulate the property market due to a slump as a result of the pandemic.

With lockdown restrictions still in place in 2021, the government decided to extend the stamp duty holiday. This means most homebuyers will save £15,000 when buying a home up to the value of £500,000, with some further reductions depending on the exact property deal.

How much money does the stamp duty holiday save homebuyers?

Before the stamp duty holiday relief was implemented, homebuyers in the UK had to pay Stamp Duty Land Tax (SDLT) on all additional property purchases over £125,000. Or, for first-time buyers, it was for purchases over the value of £300,000.

The stamp duty holiday was first announced in July of 2020. Essentially, the first tax band was set to 0% stamp duty on all property purchases of £500,000 and under.

This means that first-time homebuyers are saving £15,000 in stamp duty for house purchases of up to £500,000. There are also savings for property investors buying additional homes, and some other changes to the overall stamp duty tier listing.

UK home sales are booming

There’s no question that the stamp duty holiday had the desired effect. It’s estimated that property sales are currently the highest they’ve been for years – all despite various tiers of lockdowns still in progress throughout the UK.

Early indications are pointing towards around 160,000 home purchases taking place in March of this year. The most recent records showing home purchases reaching higher numbers is back in 2016 when stamp duty was due to rise for second-home buyers.

What both of these dates clearly show us is that when homebuyers can save on stamp duty, they’re willing to buy properties they probably wouldn’t have otherwise purchased. Or, at the very least it’s helping buyers speed up their decision to buy.

How much stamp duty will you save under the extended ‘holiday’?

First of all, if you’ve purchased land or property in the UK since July 8th, 2020, it’s a good idea to have your stamp duty checked by a tax accountant or solicitor specialising in stamp duty payments.

As for the amount you can expect to save, first-time buyers purchasing a property up to the value of £500,000 are going to save £15,000.

The same savings apply if you’re buying additional properties. Property investors buying additional homes would have paid £30,000 in stamp duty under the regular allowance, this is now halved to £15,000 during the tax relief holiday.

There are also additional stamp duty savings on home purchases up to the value of £1,500,000. There are several brackets based on the purchase price of a property, you should always seek the advice of a solicitor specialising in stamp duty for an accurate SDLT calculation.