The chancellor has announced an extension to the stamp duty scheme in England and Northern Ireland by three months until the end of June.
The stamp duty holiday has been running since last July, allowing homeowners to forego paying stamp duty on any house under a value of £500,000. Property purchase tax on the first £500,000 of a home purchase was suspended saving home buyers thousands of pounds on their move.
Extended stamp duty holiday rates:
Up to £500,000 - no stamp duty
£500,001 to £925,000 – 5%
£925,001 to £1.5m – 10%
Above £1.5m – 12%
The scheme was set to end on March 31st, but has now been extended to June 30th to help buyers in this difficult time.
Stamp Duty Land Tax is paid by all buyers upon purchase of a home in England and Northern Ireland. Since July the stamp duty purchase tax rate has been increased to help improve the housing market and allow those who have taken a financial hit due to COVID to move house easier.
Wales and Scotland have had similar relief for their respective taxes - and these schemes are due to end on March 31st.
After June 30th, the nil band rate will rise to £250,000 which is double its normal rate. This will return to £125,000 at the end of September, starting from October 1st.
Rishi Sunak says the move was ‘to smooth the transition back to normal - and we will only return to the usual level of £125,000 from October 1st.’
The Stamp Duty Holiday was introduced last summer to help buyers who may have seen a financial hit due to COVID. The scheme was also aimed at helping the property market stay running throughout the pandemic - and this scheme has helped to increase January year-on-year purchases to 121,640 sales in 2021 which is a 24.1% increase from 2020.*
MCR Property Group joins other property development companies such as Knight Frank who say that the stamp duty changes will provide relief for those buying and selling homes.
This move from the government however is not cheap, and Laith Khalaf who is a financial analyst at AJ Bell states: ‘It’s not a cheap measure, estimated to cost the taxpayer around £1.6bn.’
What can be said however is that this move will likely encourage buyers and sellers to enter the market in the next few months to make the most of this tax break.
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