At the beginning of October 2021, the stamp duty holiday ended. This policy had been in place since July 2020, and was essentially a temporary cut on stamp duty, designed to help those whose finances had been affected by the Covid pandemic.
A lot of people across the UK took advantage of the stamp duty holiday, with house prices rising significantly as a result of the tax cut. It offered a sizeable saving for many people, allowing them to move homes cheaply.
So, now that the tax holiday has ended, we’re here to bring you all the information you need to know on what stamp duty will go back to and how much it could cost you.
What is stamp duty and what happened during the holiday?
Stamp duty is a tax that you pay when you buy a property. Generally speaking, there are different levels of stamp duty, with banded rates based on the value of the property that you’re buying.
During the stamp duty holiday, there were two different thresholds above which you still had to pay stamp duty. From July 2020 to 31st March 2021, stamp duty didn’t apply to the first £500,000 of a purchase price. And after 31st March through until 30th September 2021, it didn’t apply to the first £250,000.
Of course, even if you were purchasing a home that cost more than this, you could still make a substantial saving, as the previous threshold was £125,000.
First time buyers don’t have to pay stamp duty on the first £300,000 of the purchase of their first home – now that the stamp duty holiday has ended, this policy has remained in place.
What will stamp duty rates return to?
Now that the stamp duty holiday has ended, many people are wondering what the stamp duty rates will return to. The government has confirmed that they will return to pre-pandemic levels, which are set out as below.
From £0 to £125,000: 0%
From £125,001 to £250,000: 2%
From £250,001 to £925,000: 5%
From £925,001 to £1,500,000: 10%
From £1,500,001+: 12%
The government have also provided a Stamp Duty Land Tax calculator, which you can use to calculate how much you’ll pay on your home purchase.
Was the stamp duty holiday a success?
The purpose of the stamp duty holiday was to keep the housing market going during the pandemic, which is a key way to stimulate the economy and ensure house prices don’t crash, as this could have had a serious impact on the country’s financial health.
By this measure, the stamp duty holiday was a massive success. After the first lockdown ended and people were able to get out and about viewing houses, house prices saw record increases and estate agents reported extremely strong interest.
There are, of course, many other factors affecting the surge in house prices, with the pandemic creating demand for many looking to move for more space and with many having seen their finances improve over the pandemic as a result of saving money during lockdowns.
In fact, in the long run it may turn out that the stamp duty holiday was actually too successful – keeping house prices very high and making it more difficult for first time buyers. But in the short term, this has been a popular, successful policy, helping thousands move and keeping the house market moving despite the challenges of the pandemic.
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