What are the different tax rates after june?
Anyone involved in buying or selling property in England during the pandemic will be aware of the government’s stamp duty holiday. This was introduced in July 2020 in a bid to ‘save’ the property industry from a bust, following weeks of inactivity in the first lockdown. Originally set to run until the 31st March 2021, this was extended until the 30th June which is now fast approaching. But what will happen once this period has completed? And how will stamp duty be phased back in after the holiday has ended?
Before looking at how the tax rates will adjust, it’s important to understand the benefits buyers have enjoyed during the exemption holiday. If you buy residential property or land in England, then you owe a stamp duty tax to the government based on the value of the transaction. This is applicable on both freehold and leasehold properties regardless of whether you’re a cash buyer or a mortgage borrower.
During the stamp duty holiday, anyone purchasing property worth up to £500,000 has not needed to pay any tax on it. Buyers of more expensive properties only paid tax on the portion of the transaction above the £500,000 threshold.
Prior to the stamp duty holiday, the 0% tax rate band was £125,000 and this will return again from the 1st October, 2021. Estate agents in Chelmsford explain that between the end of June and the end of September, this nil rate band will double, so buyers won’t pay any tax on the first £250,000 of their property transaction. The other tax bands will run as follows:
Between July 1 and September 30th, 2021
From 1st October, 2021 onwards
Although the stamp duty tax holiday is being phased out, there are still savings to be made until the 1st October. Chancellor Rishi Sunak has revealed that any buyers who are taking advantage of the original stamp duty savings have knocked around £4,500 from their tax bill. Additionally, 90% of buyers completing their property transactions during this time won’t have paid any tax at all.
If your property purchase doesn’t manage to go through by the end of June, then you could still potentially save thousands. Taking the purchase of a £500,000 property as an example, you’ll pay the following amounts:
First time buyers, along with home movers have been benefitting from 0% tax on properties up to £500,000. From 1st July they won’t pay any tax on properties worth up to £300,000 and this will remain unchanged from 1st October.
There’s still time to knock some money off your tax bill. If you’re interested in buying property, then now is the time to get your home on the market and start the process.