Stamp duty holiday: How much do I have to pay now?

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House hunting in Leek, StaffsImage source, Getty Images

The tax holiday on stamp duty rates which was introduced in July 2020 finishes in England and Northern Ireland at the end of September.

From 1 October, home buyers will have to pay stamp duty on all purchases above £125,000.

What is stamp duty and how is it changing?

In July 2020, the government announced a cut to help buyers whose finances were affected by Covid.

Until 31 March 2021, home buyers didn't have to pay stamp duty on the first £500,000 of a purchase price.

This meant a saving of up to £15,000.

The government later extended the tax holiday until 30 June, and then again until 30 September.

During this period home buyers didn't have to pay stamp duty on the first £250,000:

From 1 October 2021, rates return to pre-Covid levels. That means the point you start paying stamp duty will be £125,001:

  • £0-£125,000 = 0%
  • £125,001-£250,000 = 2%
  • £250,001-£925,000 = 5%
  • £925,001-£1,500,000 = 10%
  • £1,500,001+ = 12%

You can use the government's Stamp Duty Land Tax (SDLT) calculator to find out how much you will pay.

Did the stamp duty holiday push up house prices?

The stamp duty holiday definitely stimulated the housing market.

UK house prices rose 8% in the year to July, according to the Office for National Statistics (ONS).

That followed a record increase of 13.2% in June, the biggest jump since November 2004.

Estate agents reported a surge of interest in March as buyers and sellers rushed to complete property deals before the scheme was initially due to end.

Demand continued when the holiday was extended until June and then again until September.

Image caption,
The property market in Richmond, North Yorkshire has boomed over the past year

However, there are many other reasons why house prices have been surging.

"The final closure of the stamp duty scheme at the end of September may have no impact at all," says Nicky Stevenson, managing director at estate agents Fine and Country.

"Other factors are so much more important, namely the race for space, low supply, accidental savings and low interest rates."

What other help is there for first-time buyers?

First-time buyers do not have to pay any stamp duty on property purchases up to £300,000.

High Street lenders are also offering mortgages to borrowers with a deposit of just 5%, under a government guarantee scheme which launched in April 2021.

The policy is designed to help more first-time buyers secure a home.

Image source, Getty Images

The new scheme is available to anyone buying a home costing up to £600,000, unless it is a buy-to-let property, a second home or, in some cases, a new-build.

How much money does stamp duty raise?

The government's annual take from stamp duty is about £12bn, according to latest HM Revenue and Customs (HMRC) figures.

That's roughly equivalent to 2% of the tax the Treasury collects.

What about Scotland and Wales?

There were also similar tax cuts for house buyers in Scotland and Wales.

In July 2020, the starting point for land and buildings transaction tax (LBTT) in Scotland was increased to £250,000, but the concession stopped on 1 April, when the England and Northern Ireland holiday was originally due to end.

In Scotland, the current rates of Land and Buildings Transaction Tax are:

  • 0% on £0-£145,000
  • 2% on £145,001-£250,000
  • 5% on £250,001-£325,000
  • 10% on £325,001-£750,000
  • 12% on any value above £750,000

Scottish landlords pay an extra 4% Land and Buildings Transaction Tax on top of standard rates.

The Low-cost Initiative for First Time Buyers (LIFT) helps people buy their first property either on the open market, or from a council or housing association.

Image source, Getty Images
Image caption,
Estate agents say there are not enough properties coming on to the market at the moment

In July 2020, the Welsh government also increased the threshold for its land transaction tax (LTT) for people buying their main home to £250,000. It later extended the holiday until 30 June, with rates reverting back to normal from 1 July.

The current rates of Land Transaction Tax are:

  • 0% on £0-£180,000
  • 3.5% on £180,001-£250,000
  • 5% on £250,001-£400,000
  • 7.5% on £400,001-£750,000
  • 10% on £750,001-£1.5m
  • 12% on any value above £1.5m

Welsh landlords pay an extra 4% Land Transaction Tax on top of standard rates.

The Welsh government runs various schemes to help people to buy a home.