This guide breaks down all of the changes to Stamp Duty and Land and Buildings Transaction Tax including how much the threshold is in your part of the UK and how that could affect your costs for buying a property.
If there’s anything we’ve missed, feel free to pop us a question via our online chat and one of our advisors will find you the answer you need.
What is a Stamp Duty and what do the changes mean?
Stamp duty is charged when someone buys a property and the amount of stamp duty payable, depends on the value of the property being purchased.
For property in Scotland, the tax is called Land and Buildings Transaction Tax, while in Wales buyers pay Land Transaction Tax.
Before the initial changes were made in England and Northern Ireland on the 8th of July, 2020, the threshold for which people had to start paying stamp duty was set at £125,000.
However, now that the threshold has been set to £500,000, house buyers in the UK will now benefit from a temporary stamp duty holiday which could save some buyers up to £15,000.
What are the new Stamp Duty thresholds across the UK?
Though the threshold differs depending on the part of the UK you live, some buyers and buy-to-let investors can expect to make substantial savings.
UK region | Previous threshold | Temporary new threshold |
England | £125,000 (or £300,000 for first-time-buyers) | £500,000 |
Northern Ireland | £125,000 | £500,000 |
Scotland | £145,000 | £250,000 |
Wales | £180,000 | £250,000 |
Why is the threshold lower than in England and Northern Ireland?
The Welsh and Scottish thresholds are only half of that compared to Northern Ireland and England and it’s thought that this could be because of the much lower average house prices in these regions.
In both countries, the holiday is expected to mean that stamp duty is not payable on 80% of residential property transactions.
Why have the thresholds increased?
The economy suffered as a result of Coronavirus and many sectors including property were temporarily halted as a response to Government guidance.
The new announcement could encourage property purchases and reinstate confidence in the housing market, thus helping to repair the economy.
Here’s what the Chancellor of the Exchequer had to say in his speech:
“We need people to feel confident, confident to buy, sell, move and improve that will drive growth, that will create jobs. So, to catalyse the market and boost confidence I have decided today to cut stamp duty.”
How will the new changes work?
England and Northern Ireland
If you purchase a residential property between 8 July 2020 to 31 March 2021, you only start to pay SDLT on the amount that you pay for the property above £500,000 and these rates also apply to those who have owned property before.
Scotland: This likely to be the case too for home-buyers in Scotland; though, the draft legislation has not been published yet.
Wales: A major distinction with the Welsh stamp duty holiday is that it does not apply to purchases of “additional” dwellings by individuals and purchases of dwellings by companies.
Presumably, this is also intended to prevent buyers of second-homes in Wales from enjoying the holiday.
Property value | SDLT rate |
Up to £500,000 | 0% |
The next £425,000 (the portion from £500,001 to £925,000) | 5% |
The next £575,000 (the portion from £925,001 to £1.5 million) | 10% |
The remaining amount (the portion above £1.5 million) | 12% |
How do the new stamp duty changes affect property investors?
Property investors and overseas buyers can also benefit from the temporary reduced stamp duty rates which have made purchasing property cheaper overall, though there is a slight variation.
If you are a UK resident that’s purchasing a second home, or a buy-to-let investment property, you are subject to a 3% SDLT surcharge for any property purchase up to the value of £500,000.
This also applies to any overseas purchasers buying property in England or Northern Ireland for investment purposes though from April 1st 2021, there is scheduled to be an increased 2% surcharge for non-residents when buying residential property in England and Northern Ireland.
How much is stamp duty in the UK for a first-time-buyer?
Previously in England and Northern Ireland, first-time buyers were exempt from paying SDLT on property purchases up to £300,000. If the property they wanted to buy was valued over this amount, buyers would have paid 5% on the portion from £300,001 to £500,000.
The £300,000 threshold meant that the vast majority of first-time buyers were already exempt from the tax anyway, with the average price paid for a first home in England standing at £208,000.
However, now that the threshold has been temporarily increased to £500,000, first-time- buyers purchasing property on the higher end of the market will now also benefit from saving money.
For example, before the new stamp duty changes, if a first-time-buyer bought a home worth £400,000, they wouldn’t pay Stamp Duty on the first £300,000 but would be charged 5% on the additional amount of £100,000, which would be £5,000.
Under the new changes, the same buyer would be exempt from paying any stamp duty at all.
Calculating your stamp duty in 2020
For an accurate figure of how much stamp duty you can expect to pay when buying a property, ask one of our brokers who can quickly calculate your costs while also advising you on the other costs associated with buying property.
These may include:
Conveyancing costs
Land registry fee
Solicitor's fee
Mortgage arrangement fee
Booking fee
Removal hire
Advice about stamp duty changes in July 2020
Our experts provide confidential and free mortgage advice so that you can make the most informed decision.
They’ll take the time to listen to what you need and can recommend the most viable option based on your circumstances and the new changes to stamp duty. Call our team on 02380 980304 or if you’d prefer, send an enquiry and we’ll get back to you as soon as possible.
