The new stamp duty rules explained

The new stamp duty rules explained

The stamp duty ‘holiday’ introduced in July 2020 helped to stimulate the property market after the first Covid-19 lockdown.

Buyers across England and Northern Ireland were able to make savings of up to £15,000, but now the rules are changing once again.

Here, we’ll explain what stamp duty is and outline the new rules and rates you’ll need to know about if you’re planning to buy a home


What is stamp duty?

Stamp duty is the tax charged when someone buys a property or piece of land in England or Northern Ireland.

Rates of stamp duty and how much you’ll pay depend on:

• Whether or not you’re first-time buyer

• Whether you’re buying a home or a rental property

• Whether you’re a foreign buyer

• How much you’re paying for your property or land


Are first-time buyers exempt from stamp duty?

First-time buyers are exempt from paying stamp duty on the first £300,000 of a property’s purchase price, up to a maximum price of £500,000.

In order to be classed as first-time buyer, you must:

• Have never owned a property before in the UK or abroad

• Both be classed as first-time buyers if you’re buying a property with someone else


Is stamp duty extended until September?

The stamp duty ‘holiday’ introduced in July 2020 saw the exemption threshold rise to £500,000 for all buyers – meaning both first-time buyers and existing property owners paid no stamp duty on the first £500,000 of a property’s purchase price.

The ‘holiday’ was extended in March 2021, but came to an end on June 30, 2021, with new rules in place until September 2021.


What will stamp duty be in September 2021?

Until September 30, 2021, buyers who are existing or previous property owners will pay no stamp duty on the first £250,000 of a property’s purchase price.

First-time buyers are exempt from stamp duty on the first £300,000, up to a maximum purchase price of £500,000.

First-timers buying a property for more than £500,000 will pay the standard rates of stamp duty.


Stamp duty rates: What you’ll pay now

Until September 30, 2021, buyers in England and Northern Ireland will pay the following rates of stamp duty:


Portion of purchase price

Stamp duty rate

£0 - £250,000

0%

£250,001 - £925,000

5%

£925,001 - £1.5m

10%

£1.5m +

12%


First-time buyers, meanwhile, will pay:


Portion of purchase price

Stamp duty rate

£0 - £300,000

0%

£300,000 - £925,000

5%

£925,001 - £1.5m

10%

£1.5m +

12%


Buyers of second homes or buy-to-let properties must pay an additional 3% surcharge on standard stamp duty rates, meaning they’ll pay:


Portion of purchase price

Stamp duty rate

£0 - £250,000

3%

£250,001 - £925,000

8%

£925,001 - £1.5m

13%

£1.5m +

15%



Stamp duty rates after September 30, 2021

From October 1, 2021, stamp duty rules will revert to what was in place before the pandemic, meaning buyers will only be exempt from tax on the first £125,000 of a property’s purchase price.

For first-time buyers, the rules remain unchanged, and they will be exempt on the first £300,000 of a property’s purchase price.

Buyers of second homes, meanwhile, will still pay an additional 3% surcharge:


Portion of purchase price

Buyer stamp duty rate

Surcharge stamp duty rate

£0 - £125,000

0%

3%

£125,001 - £250,000

2%

5%

£250,001 - £925,000

5%

8%

£925,001 - £1.5m

10%

13%

£1.5m +

12%

15%



Land Transaction Tax rates in Wales

In Wales, property buyers pay Land Transaction Tax on purchases.

In line with the stamp duty holiday in England and Northern Ireland, buyers in Wales were exempt from tax on the first £250,000 of a property’s purchase price.

However, the Welsh ‘holiday’ came to an end on June 30, 2021, with buyers now exempt from LTT on the first £180,000 of a property’s purchase price.


Stamp duty costs where you live

Whitegates has great properties for sale all across the Midlands, North Wales and Northern England, but what will you have to pay in stamp duty before and after September 30, 2021?

We’ve looked at average prices and calculated the stamp duty due in each area…


Stamp duty before September 30, 2021


Location

Average property price

Buyer stamp duty

First-time buyer stamp duty

Investor / second home stamp duty

West Midlands

£254,473

£223

£0

£7,857

East Midlands

£251,675

£83

£0

£7,634

North West

£223,446

£0

£0

£6,703

Yorkshire & Humber

£216,614

£0

£0

£6,498



Stamp duty after September 30, 2021


Location

Average property price

Buyer stamp duty

First-time buyer stamp duty

Investor / second home stamp duty

West Midlands

£254,473

£2,723

£0

£10,357

East Midlands

£251,675

£2,583

£0

£10,134

North West

£223,446

£1,968

£0

£8,672

Yorkshire & Humber

£216,614

£1,832

£0

£8,330



Welsh Land Transaction tax


Location

Average property price

Buyer stamp duty

First-time buyer stamp duty

Investor / second home stamp duty

North Wales

£205,860

£905

£905

£9,139



Further reading…

The real cost of moving home

How to buy a house with cash