The stamp duty holiday explained

11 June 2021

The stamp duty holiday began on 8 July 2020 and is set to run until 30 June 2021, when the normal stamp duty rates will be staggered back into effect. During the stamp duty holiday, stamp duty has not been payable on the first £500,000 of a property.

Calculating Stamp Duty Land Tax

When you buy a property in England or Northern Ireland, a tax called Stamp Duty Land Tax (SDLT) is applied, which is payable to HMRC. Usually stamp duty is payable on any property worth more than £125,000 (or £300,000 for first time buyers) but under the stamp duty holiday, this threshold was increased to £500,000.

The stamp duty holiday only applies to properties in England and Northern Ireland. Scotland and Wales have slightly different versions of this tax, which do not qualify for the stamp duty holiday.

During the stamp duty holiday, on any property worth between £500,000 and £925,000, stamp duty is charged at 5%. This increases to 10% between £925,000 and £1.5m, and 12% for anything over £1.5m.

So, what this means in practice is that for a property worth £600,000, no stamp duty would be payable on the first £500,000, but stamp duty of 5% would be payable on the additional £100,000. This amounts to £5,000 instead of the old rate of £20,000 – a saving of £15,000.

For properties that are worth less than the new threshold, no stamp duty will be payable at all, which is a saving of £15,000 on a £500,000 property.

Stamp duty holiday rates for people buying a main residence:

  • £0 to £500,000 - 0%
  • £500,001 to £925,000 - 5%
  • £925,001 to £1.5m - 10%
  • £1.5m and over - 12%

Stamp Duty holiday for Landlords

The stamp duty holiday also applies to people purchasing a buy-to-let property or a second home, but the additional 3% stamp duty will continue to apply to those buying second properties.

Stamp duty holiday rates for people buying a second home or buy-to-let:

  • £0 to £500,000 - 3%
  • £500,001 to £925,000 - 8%
  • £925,001 to £1.5m - 13%
  • £1.5m and over - 15%

More information on the stamp duty holiday rates can be found on GOV.UK.

Benefits of the Stamp Duty Holiday

The stamp duty holiday was introduced to help boost the property industry, which had been expected to suffer during a period of potential financial uncertainty for many homebuyers. The property industry had already been heavily impacted by the first lockdown, with the market stalled as property viewings were unable to take place for several weeks.

The stamp duty holiday saves buyers up to £15,000 if they're buying a home worth £500,000 or less. It's estimated that the average buyer will save around £4,500, and 9 out of 10 buyers won't be liable to pay any stamp duty.

When will the stamp duty holiday end?

The stamp duty holiday came into immediate effect when it was announced on 8 July 2020, and it will run until 30 June 2021. Any property purchase in England or Northern Ireland that completes during this timeframe will be eligible for the holiday.

After the stamp duty holiday ends on 30 June 2021, there will be a staggered return to the usual rates of stamp duty. After 1 October 2021, all stamp duty rates will return to what they were before the stamp duty holiday was introduced.

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