Knock £15,000 Off Your Tax Bill With This Incentive
The government has announced a stamp duty holiday to breathe fresh life into the property industry and kickstart the economy.
Since the property market reopened for business in mid-May after seven weeks of lockdown, there have been mixed news about how well the industry has recovered. HMRC has released the most recent Residential Transactions report which provides a breakdown of the completed property sales from the previous month. June saw a 31.7% increase in total homes sold in comparison to May of this year, but unfortunately June’s total was a significant 35.9% lower than the number of homes sold in the same month of 2019. Of many financial initiatives to get the market moving, Chancellor Rishi Sunak has made major changes to the stamp duty system.
Raised Exemption Threshold
Sunak has announced that buyers could pay as little as zero stamp duty if they purchase a property between 8th July 2020 and 31 March 2021. An estate agents Chelmsford team explains that these applicable rates are for both first time buyers as well as existing property owners. If you purchase a property worth up to £500,000, then you will pay zero tax. For properties worth £500,001 to £925,000, you’ll pay 5% on the portion over the exemption threshold, and for those looking in the £925,001 to £1.5 million bracket, you’ll pay 10%. If you wish to purchase a second or additional home, then each of these categories has a 3% higher rate stamp duty tax attached to it.
Why So Generous?
Along with multiple other measures to rescue the economy, the government has chosen to invest in the property market. By providing assistance at the bottom end of the property ladder, this will help the entire chain to move along. Buyers are finding it more challenging at the moment to secure lending from banks, as they’re typically requiring much larger deposits. If you’re struggling to save enough, particularly if you live in London or other areas of the UK with higher than average house prices, then the stamp duty could save you as much as £15,000 which could be put towards your deposit instead.
The knock-on effect of this holiday is likely to encourage second steppers and even downsizers with large family homes, to put their properties on the market to entice these buyers. We know that the lockdown created a lot of pent-up demand, and there are increased numbers of buyers interested in viewing properties at the moment.
Surge of Interest
Since Rishi Sunak announced the holiday, Rightmove has experienced a significant boost in estate agents’ enquiries. They report 49% increased interest in houses priced between £400,000 to £500,000. Beyond the threshold, the news is similarly positive, with a 40% increase in those looking at the £500,001 to £750,000 category too. Buy-to-let landlords and those seeking second homes are interested too; even though they’ll still need to pay tax, they can expect to make a saving of £15,000 from their tax bill which is a great bonus.
There have been plenty of signs of life in the UK property market since lockdown ended; the only downside to the stamp duty holiday is that it will of course come to an end on 31 March, 2021. So, if you’re interested in moving house in the next few months, now is the time to take advantage of this incentive.