Over the last 18 months Stamp Duty Land tax charges have changed several times and Stamp Duty changes again on 1st October 2021.
The changes started back in July 2020 with the ‘Stamp Duty holiday’, a bold move designed to keep the housing market moving during the pandemic. This was followed by a phased return to the previous levels and this enters its final leg on the 1st October as Stamp Duty rates return to where they were before the 8th July, 2020.
From the 1st of July until the 30th of September 2021, no Stamp Duty was due on homes costing up to £250,000. On the 1st October 2021, the Stamp Duty free threshold will drop to £125,000.
It’s important to note that if you are a first time buyer buying a home that costs less than £300,000, you will still pay no Stamp Duty.
Or, if the purchase price of your first property is between £300,001 and £500,000, you will need to pay 5% Stamp Duty on the amount over £300,001 (for example, on £49,999 if your property costs £350,000).
So that you can compare the previous Stamp Duty rates to the rate as of October 1st 2021, we’ve put together this simple summary:
Properties costing up to £250,000
1st of July until the 30th of September 2021 0%
From the 1st October 2021 properties costing up to £125,000 will pay 0% but properties costing up to £250,00 will pay 2% on the portion from £125,001 to £250,000.
Properties costing up to £925,000 (covering the portion from £250,001 to £925,000)
1st of July until the 30th of September 2021 5%
From the 1st October 2021 5%
Properties costing up to £1.5m (covering the portion from £925,001 to £1.5 million)
1st of July until the 30th of September 2021 10%
From the 1st October 2021 10%
The remaining amount (the portion above £1.5 million)
1st of July until the 30th of September 2021 12%
From the 1st October 2021 12%
As you can see there is very little change unless you are buying a property costing between £125,001 and £250,000.
And investors or owners of multiple properties will see a similar change in the same price bracket.
From July to September 2021, they would have been eligible to pay 3% on properties costing up to £250,000. From 1st October they will need to pay 3% on properties costing up to £125,000 and a further 5% on any amount between £125,001 to £250,000.
Above that price point there will be no changes to the Stamp Duty rates.
Recently HMRC also introduced an additional surcharge for purchases by non UK residents. If you have not lived in the UK for at least 183 days (6 months) during the 12 months before you purchase your property, you will be classed as ‘not a UK resident’ for Stamp Duty purposes.
This means you will almost certainly continue to pay a 2% surcharge if you’re buying a residential property in England or Northern Ireland after the 1st October 2021.
There are some exceptions to this rule for certain types of properties, certain types of transactions and for certain types of buyers. We’d always suggest you check with a solicitor to see whether you may be eligible for relief.
And if you do need to pay this 2% surcharge, you’ll also need to remember that it will be in addition to all of the other rates of Stamp Duty Land Tax outlined above.
As always, we would advise you to calculate and budget for the Stamp Duty charges, you’ll have to meet if you are planning to buy a house or flat. While we would be happy to help you with that you could also try one of the many Stamp Duty calculators online.
If you are planning to move in the near future, we are here to make sure your move is as easy possible. If you’d like to discuss an upcoming sale or purchase, please email me at Jeremy.Tulloch@collinshoy.com or call me on 0208 515 6600.