Stamp Duty bands: How much stamp duty will you have to pay after holiday ends?

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Stamp Duty is a tax charged to individuals when buying a property in England or Northern Ireland. The Government unveiled the Stamp Duty holiday earlier this year in a bid to kickstart the property market which had been hard hit by the COVID-19 crisis and subsequent lockdown. But how much Stamp Duty will you have to pay once the Stamp Duty holiday ends?

What is Stamp Duty?

Stamp Duty land tax is a lump-sum tax payment which people must pay when buying a property in England or Northern Ireland.

This tax amount is tiered which means you pay different rates depending on the price of the property.

The rate also differs depending on the type of property and the location.

You will also pay different rates depending on if you are a first-time buyer, home mover or buying a buy-to-let, second or holiday home.

In England and Northern Ireland, buyers pay Stamp Duty Land Tax, but in Scotland, it is Land and Buildings Transaction Tax, while in Wales buyers pay Land Transaction Tax.

What is the Stamp Duty holiday?

On July 8, the Government introduced the Stamp Duty holiday which increased the Stamp Duty threshold in England and Northern Ireland to property sales worth up to £500,000.

This meant higher property movers can save as much as £15,000 if they buy their home before March 31, 2021.

According to property website Zoopla, around 140,000 property sales are currently in the pipeline which is double the number usually seen for this time of the year.

Chief of Strategy at the online mortgage company Habito Martijn van der Heijden told “The Stamp Duty holiday announcement made in June served to turbo-charge the housing market – which was already buoyant from the pent-up demand for property that we saw coming out of the first lockdown.

“Now, there’s a rush of home buyers wanting to complete before March, to benefit from the stamp duty holiday before it ends.

“But, we’re seeing delays to home-buying services – such as conveyancing, and property surveys – as those services try to cope with this demand.

“We’re calling on the Government to extend the stamp duty holiday beyond March 31, 2021, to give more certainty to those concerned about missing the deadline.

“This would bring stability to a nervous market and avoid a rush of property transactions being cancelled or falling-through.”

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Mr van der Heijden added there is a risk buyers will not be able to complete deals before the Stamp Duty holiday ends.

He said: “The risk is that when prospective buyers think they won’t complete in time to make the saving, they give up and whole property chains are knocked out.

“This is starting to happen already and could increase as March gets closer.

“That would be a potentially large impact of not extending the policy.

“Of course, there is data to show that the holiday has inflated house prices as well, so extending the policy also could continue this trend.”

What are the different Stamp Duty rates after the Stamp Duty holiday ends?

From April 1, 2021, the following Stamp Duty Land Tax (SDLT) rates apply based on property or lease premium or transfer value:

  • Property worth up to £125,000: Zero SDLT
  • £125,000 – (The portion from £125,001 to £250,000): Two percent
  • £675,000 (The portion from £250,001 to £925,000): Five percent
  • £575,000 (The portion from £925,001 to £1,5 million): 10 percent
  • The remaining amount (The portion above £1.5m): 12 percent.

So for example, if you were to purchase a £300,000 home, you’d pay no SD on the first £125,000, then two percent on the next £125,000 at £2,500.

You’d then pay five percent on the remaining £50,000 cost of the property, at £2,500.

This means in total you’ll pay £5,000.

If you are buying your first home, you will pay no SDLT up to £300,000, but will then pay five percent on the portion from £300,001 to £500,000.

If the property value is more than £500,000, you must follow the rules for people who have bought a home before.

You will pay three percent on top of SDLT rates if buying a new residential property which means you own more than one. So this means:

  • Property worth up to £125,000: Three percent
  • £125,000 – (The portion from £125,001 to £250,000): Five percent
  • £675,000 (The portion from £250,001 to £925,000): Eight percent
  • £575,000 (The portion from £925,001 to £1,5 million): 13 percent
  • The remaining amount (The portion above £1.5m): 15 percent.

For example, if you are buying the same £300,000 property as a second home, you’ll pay a total of £14,000 stamp duty.

You can use this SDLT calculator to work out how much tax you will pay.

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