Yesterday, Chancellor Rishi Sunak made his ‘Summer Economic Update’ announcement, laying out the Government’s plans to help the UK economy stay afloat in the wake of the Coronavirus pandemic.
In an unprecedented move, he set out temporary adjustments to the Stamp Duty Land Tax (SDLT) thresholds, which is positive news for property buyers and property investors.
What has changed?
The government has temporarily increased the stamp duty threshold to £500,000 for property sales in England and Northern Ireland, until 31 March 2021.
This means anyone completing on a main residence costing up to £500,000 between 8 July and 31 March will not pay any stamp duty, and more expensive properties will only be taxed on their value above that amount.
This will save buyers as much as £15,000, if they are buying a property of £500,000 or more.
How much stamp duty will I pay now?
If the property purchased is your main home you won’t pay any stamp duty on it at all if it costs £500,000 or less.
The next portion of the property’s price (£500,001 to £925,000) will be taxed at 5%, and the £575,000 after that (£925,001 to £1.5 million) will be taxed at 10%
The remaining amount (over £1.5 million) will be taxed at 12%. You can calculate how much you are liable to pay here.
Will landlords benefit?
In short, yes! Landlords and second home buyers are eligible for the tax cut but will be required to pay the extra 3% of stamp duty they were charged under the previous rules.
This huge tax cut means that landlords could make, on average, a 40% saving on new investments. It also makes it possible for property investors to consider purchasing higher-priced properties, which might attract higher rental income and therefore be a more profitable investment in the long-term.
Get up to date mortgage advice
The stamp duty tax cuts will no doubt make purchasing property more enticing and viable. Get in touch with our expert mortgage brokers to learn more about current interest rates and how lenders are supporting buyers through these challenging times. Call us today on 020 3645 4322.