Stamp duty holiday: How will it work?

The chancellor Rishi Sunak has announced that with immediate effect, there will be a temporary holiday on stamp duty for the first £500,000 of all property sales in England and Northern Ireland.

Intended to boost the property market, the holiday will be in place until March 2021   

Who pays stamp duty and how much?

In England and Northern Ireland stamp duty is paid on land or property sold for £125,000 or more.

However, first-time buyers pay no tax up to £300,000 and 5% on any portion between £300,000 and £500,000.

For people who have bought a home before, stamp duty rates are 2% on £125,001-£250,000, 5% on £250,001-£925,000, 10% on £925,001-£1.5m, and 12% on any value above £1.5m.

That means someone spending £248,000 - the average cost of a house - would currently pay £2,460 in stamp duty to move home.

What has changed?

The government has increased the lower stamp duty threshold to £500,000 for property sales in England and Northern Ireland.

That means any property purchases below the new level will not need to pay stamp duty as long as the deal is completed before 31 March 2021. And nearly nine out of 10 people buying a main home this year, will pay no stamp duty at all."

When will the stamp duty holiday happen?

It is effective immediately from Wednesday and will last until 31 March next year.

The holiday applies from 8 July, which means anyone completing a property purchase before that date will have to pay the full normal stamp duty.

How much could a buyer save?

The more you pay - up to the new £500,000 threshold - the more you could save on stamp duty.

Before the stamp duty holiday, if you bought a house for £275,000, for instance, the stamp duty you'd have had to pay would have been £3,750.

That's based on 0% duty on the first £125,000, 2% on the next £125,000 (£2,500), plus 5% on the final £25,000 (£1,250).

At the new threshold you would pay no duty on a house costing £500,000 creating a saving of £15,000. 

What if I've exchanged but not completed?

The requirement to pay stamp duty is triggered when you complete the purchase of the property. So if you've exchanged prior to 8 July but not completed, you'll benefit from the increased thresholds. 

You can use the table below to work out the stamp duty due: