15th March 2021
Many homebuyers nervously awaited Chancellor Rishi Sunak's budget announcement on 3rd March 2021, fearing that the removal of stamp duty relief could jeopardise their planned move.
It was a relief to many therefore to hear the Chancellor's plans to extend this relief, in the hope of further stimulating the property market. In his budget on 3rd March 2021, Rishi Sunak announced that homebuyers will continue to pay no tax on properties up to £500,000 until 30th June 2021. From 30th June until 30th September 2021, no tax will be paid on the first £250,000 spent on house purchase.
So, what does this mean for homebuyers?
For those looking to complete by 30 June 2021, the extension of tax relief means that a property for £1,000,000 for example would pay no tax on the value of the property up to £500,000, and 5% tax on the property value between £500,001 and £925,000 and then a hgher rate of 10% on the last £75,000. In this case, total liability for Stamp Duty would therefore be £28,750 rather than the pre-COVID Relief levy of £43,750 - a saving of £15,000 based on the Stamp Duty rates that were in place prior to the 8th July 2020*.
For those looking to complete after 30th June 2021, but before 30th September 2021, the total liability on a £1,000,000 property would be £41,250, a saving of just £2,500*.
Completions after 30th September 2021 will be subject to the pre-COVID relief rates - so a property purchased for £1,000,000 will be subject to a stamp duty levy of £43,750.
While this is good news for those home-buyers who have their chain lined up and are ready to exchange, there will be a continued pressue on buyers in weaker chains to get past the post before 30th June 2021. Many property experts and estate agents agree that the current level of activity is likely to continue with buyers eager to complete before the end of June 2021.
*If you’re purchasing additional properties you will still have to pay an extra 3% in Stamp Duty on top of the revised rates for each band (even if the property you already own is abroad).