He’s raised the tax threshold until 31 March 2021 with immediate effect in a bid to boost the property market and help buyers struggling due to the financial impact of coronavirus. If you’re planning a move, you could now save up to £15,000 in tax.
What is stamp duty?
Stamp duty is a tax paid by people purchasing a property or piece of land in England or Northern Ireland – it varies across the UK, as Scotland and Wales have their own systems.
Prior to the chancellor’s financial statement, stamp duty in England and Northern Ireland was paid on land or property sold for £125,000 or more. But first-time buyers already didn’t pay any stamp duty for home purchases up to £300,000.
Landlords and second home buyers are also eligible for the new tax cut but will still have to pay the extra 3% stamp duty that applied under the previous rules.
Scotland and Wales have also had the thresholds raised on their equivalents to stamp duty. In Scotland, the usual £145,000 threshold on land and buildings transaction tax was raised to £250,000 on 15 July. A new £250,000 threshold will also apply to land transaction tax in Wales from 27 July. The new thresholds will remain in place in Scotland and Wales until 31 march 2021.
The stamp duty threshold has been raised to £500,000 until 31 March 2021. This means if you’re looking to buy a home worth up to £500,000 you won’t have to pay any stamp duty. And if the property you want to buy is more expensive, you’ll be taxed on its value above that amount. You could save as much as £15,000 on tax if you buy a property of £500,000 or more.
The chancellor has suggested the average stamp duty cost will drop by £4500 and nearly nine out of 10 people will pay no stamp duty at all.
And, because stamp duty’s payable on completion of the sale, if you’re in the middle of buying a home and haven’t yet exchanged contracts, you’ll benefit from this change.
Time to move?
If the stamp duty holiday means you could now afford to move, there are some things you can do to ensure you get the best mortgage deal possible.
Check your credit report’s in good shape
Before you think about applying it’s a good idea to get your credit report in shape. Lenders will look at this to work out if you’re likely to be a responsible and reliable borrower. The better your credit rating the better the choice and rates of the deals available to you. You can check your credit score for free with an Experian account to get an idea of where you stand.
Work out your budget
Calculate what you can realistically afford to make sure you can meet all your mortgage repayments. Missing them could mean you lose your home. Check out our mortgage calculator to see how much you’ll pay each month and how much interest you’ll pay.
See your eligibility for a selection of lenders
When you’re ready, you can search for a mortgage with us and see your chances of acceptance for a range of mortgage providers. We check your credit information against lenders’ criteria to give you your chances of approval. We can also work out how much you could borrow and then pass you to our expert broker partner, L&C, for fee free mortgage advice.