Stamp Duty Land Tax (Stamp Duty) is a tax paid by people buying property or land over a certain price in England and Northern Ireland.

The amount of Stamp Duty payable to the government depends on the price of the property and whether you’re a first-time buyer.

Stamp Duty is currently 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.

An additional 3% of Stamp Duty is charged on top of the normal Stamp Duty rates if buying a new residential property means that you will own more than one.

What has changed?

The government has increased the lower Stamp Duty threshold to £500,000 for property sales in England and Northern Ireland effective immediately from Wednesday 8^th July 2020.

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.

People buying second homes and buy-to-let properties will also benefit, but will still have to pay the additional 3% on the entire price.

The move is temporary and is aimed at helping buyers who have taken a financial hit because of the coronavirus crisis.

How much could you save?

The more you pay, up to the new £500,000 threshold the more you could save on Stamp Duty.

Some examples of typical house prices in Oxford and Marylebone follow.

Oxford

Before the Stamp Duty holiday if you bought a house for £520,373 (the Rightmove average price of a property sale in Oxford over the last year), the Stamp Duty you would have had to pay would have been £16,018. 

That’s based on:

• 0% duty on the first £125,000
• 2% on the next £125,000 (£2,500)
• plus 5% on the final £270,373 (£13,518)

This transaction would now result in £1,018 Stamp Duty payable based on:

• 0% duty on the first £500,000 
• 5% on the final £20,370

Marylebone

Before the Stamp Duty holiday if you bought a house for £1,632,228 (the Rightmove average price of a property sale in Marylebone over the last year) the Stamp Duty you would have had to pay would have been £109,617. 

That’s based on:

• 0% duty on the first £125,000
• 2% on the next £125,000 (£2,500)
• 5% on the next £675,000 (£33,750)
• 10% on the next £575,000 (£57,500)
• plus 12% on the final £132,228 (£15,867)

This transaction would now result in £94,617 Stamp Duty payable based on:

• 0% duty on the first £500,000,
• 5% on the next £425,000 £21,250),
• 10% on the next £575,000 (£57,500)
• 12% on the final £132,228 (£15,867).

The Stamp Duty holiday means anyone buying a home in Oxford or Marylebone would save £15,000 in Stamp Duty, based on the above illustrations. This is a result of the increase of the Stamp Duty threshold from £125,000 to £500,000 saving Stamp Duty of 2% on £125,000 and 5% on £250,000 where the full £500,000 threshold is utilised.

NB: these example calculations are based on freehold property sales where the purchaser does not own any other property nor are they purchasing their first home.