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Stamp Duty Update 2020

Fantastic news for property buyers and sellers! Here’s the lowdown on the recent stamp duty changes

Stamp duty calculator


 

Could you save thousands in Stamp Duty costs?

On the 8th of July, Chancellor of the Exchequer, Rishi Sunak announced that anyone looking to purchase a main home under £500,000 will pay absolutely nothing in stamp duty tax. The cuts to stamp duty tax will remain in place until 31st March 2021 – saving buyers thousands*.

In his statement today, he noted that the average stamp duty bill will fall by £4,500. Buyers of additional properties, such as second homes and buy-to-let properties, will also benefit from this tax cut.

If you’re wondering what this means for you, you’re in the right place.

Here’s everything you need to know about stamp duty and the new changes.

What is Stamp Duty?

Stamp Duty Land Tax (SDLT) is the tax that must be paid when you purchase a property or a piece of land. The amount of money required for stamp duty depends on the overall price of the property as well as factors like whether it is residential or non-residential and whether or not you are a First Time Buyer.

How much would you usually pay?

If the property is worth between £125,001 and £250,000, the stamp duty land tax rate is 2%. So if the property was valued at £250,000, you would have to pay an extra £2,500 in stamp duty tax.

For the next £675,000, the rate is 5%. If the property you were purchasing was valued between £250,001 and £925,000 bracket, the buyer would not pay any stamp duty on the first £125,000, but would pay a 2% rate on the next £125,000 and would pay a 5% rate on the following £675,000. So, as you can see, the tax charges add up.

Under these new tax changes, there will be absolutely no stamp duty tax on homes up to £500,000 and then 5% between £501,000 and £925,000.

Benefits if you’re buying a property

These new changes mean you could save thousands in tax costs on your new main home. If, for example, you were purchasing in an area where the average house price is £500,000 you could save a whopping £15,000 by purchasing now, whilst the stamp duty cut is in place.

If you take a look at the tables below, you can see the difference these tax changes will make to your main home purchase.

House price

Stamp duty rate previously

Stamp duty rate during holiday

Up to £125,000 0% 0%
£125,001 - £250,000 2% 0%
£250,001 - £925,000 5% 0% up to £500,000. 5% between £500,001 - £925,000 
£925,001 - £1,500,000  10% 10%
> £1,500,001 12% 12%

House price example

Stamp duty previously

Stamp duty during holiday

£125,000 £0 £0
£250,000 £2,500 £0
£350,000 £7,500 £0
 £500,000  £15,000 £0
£925,000 £36,250 £21,250

Benefits if you're a landlord or buying a second property

There’s also great news for landlords and those of you purchasing a second or additional property. Where previously there would have been the higher buying tax rate and an additional 3% tax fee, now anyone looking to purchase will only have to pay 3% up to £500,000. For this reason, buying property will now be cheaper for landlords.

If you are purchasing a property for under £40,000 there is no stamp duty charge. However, if the property is between £40,000 - £500,000, SDLT will be charged at 3% of the total purchase price. 

Property price

Additional property stamp duty rate before holiday

Additional property stamp duty rate during holiday

Up to £125,000 3% 3%
£125,001 - £250,000 5% 3%
£250,001 - £925,000 8% 3% up to £500,000. 8% between £500,001 - £925,000 
£925,001 - £1,500,000  13% 13%
>£1,500,001 15% 15%

Benefits if you’re selling a property

If buyers are saving thousands in tax costs on the prices of their homes, they are more likely to pay your asking price. Equally, when you come to purchase a new main home, you would usually have paid a higher level of stamp duty as you’re not a First Time Buyer. However, under these new tax changes, you could find yourself saving a tidy lump sum.

So, what’s next?

Who knows when there will be an opportunity to save on stamp duty like this again? The announcement is designed to give the UK economy a shot in the arm and, at the same time, it brings with it the opportunity for buyers to save thousands.

Now is a brilliant time to move and make these savings.

It's time to get moving

Now is a brilliant time to move and make these savings.

Get in touch today

 

Could you save thousands in Land and Buildings Transaction Tax costs?

On Thursday 9th July, Finance Secretary Kate Forbes announced measures to boost the Scottish economy by raising the threshold for Land and Buildings Transaction Tax (LBTT) to £250,000. This means if you’re purchasing a home in Scotland for under this threshold, you’ll now pay absolutely nothing in Land and Buildings Transaction Tax.

This amendment will mean 8 in 10 house buyers in Scotland will not pay LBTT. Landlords and buyers of additional properties, such as second homes and buy-to-let properties, will also benefit from this tax cut which will remain in place until 31st March 2021. 

So, what does this mean for you?

Here’s everything you need to know about Land and Buildings Transaction Tax and the new changes.

What is Land and Buildings Transaction Tax?

Land and Buildings Transaction Tax (LBTT) is the tax that must be paid when you purchase a property or a piece of land. It is administered by Revenue Scotland, with support from Registers of Scotland.

LBTT replaced UK Stamp Duty Land Tax in Scotland on 1 April 2015.

Similar to Stamp Duty, the amount of money required depends on the overall price of the property as well as factors like whether it is residential or non-residential and whether or not you are a First Time Buyer or purchasing an additional dwelling.

How much would you usually pay?

The threshold for Land and Buildings Transaction Tax (LBTT) is currently £145,000. If the property is worth between £145,000 and £250,000, the LBTT tax rate is 2%. From £250,000 to £325,000 the rate sits at 5% and a further 10% between £325,000 and £750,000.

The average new-build home in Scotland currently costs around £225,000, so you would previously have has to pay an extra £1,600 in tax. Under these new tax changes, there will be absolutely no LBTT tax to pay on homes up to £250,000, including new builds.

Benefits if you’re buying a home

These new changes mean you could save thousands in tax costs on your new property purchase. If, for example, you were purchasing in an area where the average house price is £250,000 you could save a whopping £2,100 in LBTT tax costs by purchasing now, whilst the tax cut is in place.

If you take a look at the table below, you can see the difference these tax changes will make to your main home purchase.

House price example

LBTT % Rate before change

LBTT % Rate after change

Up to £145,000 0% 0%
£145,001 - £250,000 2% 0%
£250,001 - £325,000 5% 5%
 £325,001 - £750,000 10% 10%
Over £750,000 12% 12%

Benefits if you’re selling a home

If buyers are saving thousands in tax costs on the prices of their homes, they are more likely to pay your asking price. Equally, when you come to purchase a new main home, you would usually have paid a higher level of LBTT tax as you’re not a First Time buyer. However, under these new tax changes, you could find yourself saving a tidy lump sum.

Benefits if you’re a landlord or buying a second home

There’s also great news for landlords and those of you purchasing a second or additional property. Where previously there would have been the higher buying tax rate of ‘Additional Dwelling Supplement’ plus an additional 4% tax fee, now anyone looking to purchase will only have to pay 4% tax up to £250,000. For this reason, buying property will now be cheaper for landlords.

So, what’s next?

The change was introduced on 15th July 2020 and will remain in force until 31 March 2021.

Who knows when there will be an opportunity to save on Land and Buildings Transaction Tax like this again? The tax change is designed to give the Scottish economy a shot in the arm and, at the same time, it brings with it the opportunity for buyers to save hundreds, if not thousands.

Now is a brilliant time to move and make these savings.

It's time to get moving

Now is a brilliant time to move and make these savings.

Get in touch today

 

Could you save thousands in Land Transaction Tax costs?

On Tuesday 14th July, the Finance Minister Rebecca Evans announced the temporary increase in the Land Transaction Tax threshold to £250,000. This means if you’re purchasing a home in Wales for under this threshold, you’ll now pay absolutely nothing in Land Transaction Tax. If you’re purchasing a home in England, the Stamp Duty changes there apply.

The threshold for the Land Transaction Tax, which replaced Stamp Duty in Wales in 2018, was previously set at £180,000. From the 27 July, the new tax threshold will be £250,000 and this will remain in place until 31st March 2021. 

Under these changes, it is estimated that more than 80% of Welsh home buyers will pay no tax at all.

So, what does this mean for you?

Here’s everything you need to know about Land Transaction Tax and the new changes.

What is Land Transaction Tax?

Land Transaction Tax is the tax that must be paid when you purchase a property or a piece of land. It is collected by the Welsh Revenue Authority. Similar to England’s Stamp Duty, the amount of money required depends on the overall price of the property as well as factors like whether it is residential or non-residential and whether or not you are a first-time buyer or purchasing an additional dwelling.

How much would you usually pay?

The threshold for Land Transaction Tax is currently £180,000. Previously you would pay no tax on purchases under that threshold but then the portion over £180,000 up to and including £250,000, you would pay 3.5% tax. A further 5% tax should be paid on the portion over £250,000 up to and including £400,000 and then 7.5% tax on the portion over £400,000 up to and including £750,000. These new changes mean you now pay no tax new tax threshold will be £250,000.

Benefits if you’re buying a home

These new changes mean you could save thousands in tax costs on your new property purchase. If, for example, you were purchasing in an area where the average house price is £250,000 you could save a whopping £2,450 in Land Transaction Tax costs by purchasing now, whilst the tax cut is in place.

If you take a look at the tables below, you can see the difference these tax changes will make to your main home purchase. The first table relates to the Land Transaction Tax changes in Wales, where the second highlights the Stamp Duty changes in England. 

Welsh Land Transcation Tax Changes

House price example

LTT % Rate before change

LTT % Rate after change

Up to £180,000 0% 0%
£180,001 - £250,000 3.5% 0%
£250,001 - £400,000 5% 5%
 £400,001 - £750,000 7.5% 7.5%
£750,001 - £1,500,000 10% 10%
Over £1,500,000 12% 12%

Benefits if you’re selling a home

If buyers are saving thousands in tax costs on the prices of their homes, they are more likely to pay your asking price. Equally, when you come to purchase a new main home, you would usually have paid a higher level of tax as you’re not a First Time buyer. However, under these new tax changes, you could find yourself saving a tidy lump sum.

So, what’s next?

From 27th July, the new tax threshold will be £250,000. It will remain in force until 31st March 2021.

Who knows when there will be an opportunity to save on Land Transaction Tax like this again? The tax change is designed to give the Welsh economy a shot in the arm and, at the same time, it brings with it the opportunity for buyers to save hundreds, if not thousands.

Now is a brilliant time to move and make these savings.

It's time to get moving

Now is a brilliant time to move and make these savings.

Get in touch today