Stamp Duty in 2021 – top ten questions and answers

Stamp Duty seems to be a hot topic for 2021, especially since the stamp duty holiday extension was announced but, you might ask, what exactly is it and how might it affect me, now and in the future? Here’s a handy Stamp Duty Q&A to answer the questions you may have.

1. What is stamp duty? 

Stamp Duty Land Tax (SDLT) is payable to the government when you buy a property or land in England or Northern Ireland that costs over a set amount. The amount you pay is banded, with a different percentage applied to different amounts of the purchase price. Different rates can also apply if the property is in addition to your main residence.

2. Why do we pay stamp duty?

It’s to help the government raise revenue and can also affect the behaviour of buyers and influence how the property market performs. An example of this is the stamp duty holiday that was introduced during the Covid-19 pandemic to help stimulate market activity.

3. What is the stamp duty holiday or break?

It came into effect on 8 July 2020 to encourage buyers to enter the market during the Covid crisis. It led to no stamp duty being payable when buying a residential property under the value of £500,000. Before then tax was payable on any property over the value of £125,000.

4. What date does the stamp duty holiday end?

Originally it was due to end on 31 March 2021 but, just weeks before this, the Chancellor extended it until 30 June 2021 and also advised:  

• From 1 July until 30 September 2021, stamp duty would continue not to be payable on properties under the value of £250,000 and then,
• From 1 October, stamp duty would apply for properties valued £125,000 and above – as it did before the stamp duty holiday came into effect.

5. How much will stamp duty be in 2021 – and what are the old stamp duty calculations?

Here’s a quick guide. Remember, different percentages apply for each portion of the purchase price, as the example shows.

Before July 7th 2020

£0 to 125,000 = 0%

£125,001 to 250,000 = 2%

£250,001 to 500,000 = 5%

£500,001 to 925,000 = 5%

£925,001 to 1,500,000 = 10%

1,500,001 plus = 12%

8th July 2020 to 30th June 2021

£0 to 125,000 = 0%

£125,001 to 250,000 = 0%

£250,001 to 500,000 = 0%

£500,001 to 925,000 = 5%

£925,001 to 1,500,000 = 10%

1,500,001 plus = 12%

1st July 2021 to 30th September 2021

£0 to 125,000 = 0%

£125,001 to 250,000 = 0%

£250,001 to 500,000 = 5%

£500,001 to 925,000 = 5%

£925,001 to 1,500,000 = 10%

1,500,001 plus = 12%

After 30th September 2021

£0 to 125,000 = 0%

£125,001 to 250,000 = 2%

£250,001 to 500,000 = 5%

£500,001 to 925,000 = 5%

£925,001 to 1,500,000 = 10%

1,500,001 plus = 12%

As an example, when buying a £600,000 property you’d pay:

• Pre 8/7/2020: £20,000 (calculated by £0 - 125k at 0%, £125K - 250k at 2% = £2,500 and £250K- 600K at 5% = £17,500.

• Between 8/7/2020 and 30/6/2021: £5,000 (calculated by £0 to 500K at 0% and £500K - 600K at 5% = £5,000)

• Between 1 /7/2021 and 30/9/2021: £17,500 (calculated by £0 – 250K at 0% and 250K – 600K at 5% = = £17,500)

• After 1/10/2021: £20,000 (calculated by £0 to 125k at 0%, £125K – 250k at 2% = £2,500 and £250K - 600K at 5% = £17,500

(*) IMPORTANT: First time buyers pay no stamp duty on properties under the value of £300,000. This stamp duty band for first time buyers will therefore start at £300,000

6. How can I calculate how much Stamp Duty I pay?

That’s easy, simply access Your Move’s Stamp Duty Calculator.

7. Could I benefit from the stamp duty holiday?

It’s unlikely that you’ll be able to benefit from the stamp duty holiday if you have not yet agreed to buy a property. The stamp duty holiday was originally introduced to give time for transactions to complete over several months i.e. the time it usually takes to complete a house purchase.

8. Has the stamp duty holiday affected the market?

Yes, NAEA Propertymark, the UK’s leading professional body for estate agency personnel, reported in its February Housing Report that.

“Over the past few months, we’ve witnessed a boom in the number of prospective buyers and the number of sales taking place following the government’s announcement of a Stamp Duty holiday.”

9. Is it different in Scotland, Wales and Northern Ireland?

Northern Ireland follows the same SDLT regime as in England but different taxes apply in Scotland, where you’ll pay Land and Buildings Transaction Tax and in Wales, where you’ll pay Land Transaction Tax.

10. Is there further help available?

Yes, if you’d like to gain further advice and information about Stamp Duty, simply access our Stamp Duty Guide or seek support from any one of our branches.