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Stamp duty holiday - what does it mean for me?

How does the new stamp duty holiday impact me?

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Today, a temporary holiday on stamp duty was announced on the first £500,000 of all home purchases in England. This means that all buyers purchasing a main residence will only start to pay stamp duty on purchases above £500,000.

Quickly see how much you can save using our Stamp duty holiday calculator.

What changed?

For first time buyers: Before today, first time home buyers buying a home for less than £500,000 paid no tax up to an upper limit of £300,000, and then paid 5% tax on any portion between £300,000 and £500,000. That upper limit has now been raised to £500,000, meaning that first time home buyers buying homes worth less than £500,000 will pay no stamp duty tax.

For second time + buyers: Before today, people who had bought a home before paid 2% on £125,001-£250,000, 5% on 250,001-925,000, 10% on £925,001-£1.5m and 12% on anything above £1.5. The new £500,000 tax-free limit also applies to second-time buyers: they will pay no tax up to £500,000 and 5% from £500,000-£925,000 (higher tax brackets will stay the same).

Who benefits the most?

For first time buyers: Having previously been exempt up to £300,000, first-time buyers have an additional £200,000 tax-free, which could save them up to £10,000 in stamp duty if the property is worth more than £500,000. This may well be the case for London buyers, where last year the average flat sold for over £550,000.

For second time + buyers: Those buying for a second (or later) time could experience an even greater windfall, as they wouldn't have been eligible for the £300,000 first time buyer tax break. A second-time buyer could enjoy a maximum of £15,000 off their stamp duty bill, for a property worth more than £500,000.

When does the temporary holiday start?

The temporary stamp duty holiday starts today (8th July 2020) and runs until the 31st of March 2021. Home purchases that complete during this period will benefit from the reduced stamp duty.

Completion is the last step in a property transaction when legal documents have been transferred between solicitors and the purchase price has been paid. The seller must vacate the property by this date and the buyer can get the keys and move in.

How can Nested help?

Nested is uniquely positioned to help you put that saving to use. As the only estate agent that will also negotiate for you on the home you are buying, we give you the best chance of turning your stamp duty saving into an extra bedroom, a bigger garden or whatever it is you are looking for in your next home.

A few examples

First time home buyer purchasing a home for £400,000

Pre-stamp duty holiday:

  • First £300,000 - tax-free
  • Next £100,000 at 5% = £5,000
  • Total Stamp Duty: £5,000

Post-stamp duty holiday:

  • First £500,000 - tax-free
  • Total Stamp Duty: £0

Total Savings: £5,000

First time home buyer purchasing a home for £500,000

Pre-stamp duty holiday:

  • First £300,000 - tax-free
  • Next £200,000- at 5% = £10,000
  • Total Stamp Duty: £10,000

Post-stamp duty holiday:

  • First £500,000 - tax-free
  • Total Stamp Duty: £0

Total Savings: £10,000

Second time + home buyer purchasing a home for £500,000

Pre-stamp duty holiday:

  • First £125,000 - tax-free
  • Next £125,000 - at 2% = £2,500
  • Next £250,000 - at 5% = £12,500
  • Total Stamp Duty: £15,000

Post-stamp duty holiday:

  • First £500,000 - tax-free
  • Total Stamp Duty: £0

Total Savings: £15,000

First or second-time home buyer purchasing a home for £700,000

Pre-stamp duty holiday:

  • First £125,000 - tax-free
  • Next £125,000 - at 2% = £2500
  • Next £500,000 - at 5% = £22,500
  • Total Stamp Duty: £25,000

Post-stamp duty holiday:

  • First £500,000 - tax free
  • £500,000-£925,000 - at 5%
  • Total Stamp Duty: £10,000

Total Savings: £15,000