Thousands of housebuyers could be set for a stamp duty “holiday” as part of the Chancellor’s plans to boost the property market following the coronavirus shutdown.
Under plans expected to be unveiled by Rishi Sunak on Wednesday, Brits could be in line for a mammoth tax break on all homes purchased.
The Chancellor is expected to remove tax on the purchase of homes of up to £500,000, according to leaked plans ahead of the mini-Budget.
But how would a stamp duty holiday work and how long would it last? We explain everything we know so far.
Could I get a stamp duty holiday and how would it work?
Ministers are currently in talks to increase the threshold at which housebuyers start paying stamp duty in England and Northern Ireland.
This ‘holiday’ is expected to last for six-months – though more details will be announced during tomorrow’s speech.
First time buyers are already exempt from stamp duty up to £300,000, and pay discounted rates up to £500,000.
For everyone else, the levy only applies after £125,000. Once you reach this threshold, you typically pay 2% of the value between £125,001 and £250,000, and 5% between £250,001 and £925,000.
Under rumoured proposals, the threshold could rise to £300,000 but it may be set as high as £500,000.
That would enable some homes at the lower end of the housing market in London to be taken out of stamp duty. It would then encourage more people to buy – giving the property market a much needed boost.
Property website Zoopla said the holiday would mean an extra 73% of sales would be exempt from the basic level of stamp duty.
“Stamp duty holidays are a tried and trusted way to support housing market activity and provide an additional incentive to move home at times when the economy has been hit,” Richard Donnell, research and insight director at Zoopla said.
“Temporarily removing stamp duty for homes up to £500,000 for six months will cost the Treasury £1.3billion but it will ensure almost one in ten sales will be free of the tax, compared to just 16% now.
“The greatest benefit will be found in markets across southern England where there are more homes with average prices closer to £500,000.
“Housing activity has already rebounded strongly since the market reopened and any major change to stamp duty would provide a further boost to demand for housing. The Government would hope that the savings feeds into additional spending in the real economy with more cash spent on home improvements and white goods rather than enabling buyers to spend that bit more on their next home.”
What is stamp duty and how much would I normally pay?
Stamp duty is a tax paid by people buying properties. How much you pay depends on whether you’re a first time buyer, the location and the price of the property you are buying.
You can calculate how much stamp duty you currently have to pay on the Money Advice Service website.
The government also has a handy calculator that tells you how much you would pay on a property.