Analysis from property advisers Savills shows that the stamp duty holiday announced today could save home buyers in England up to £15,000.
The price threshold at which buyers start to pay stamp duty is now £500,000, up from £125,000. That means someone buying the average home in England, worth £248,000, would pay no stamp duty at all, a saving of £2,460. Someone buying a £500,000 property would save the maximum £15,000.
While properties over £500,000 will pay stamp duty, they’ll pay £15,000 less than before. This will bring the stamp duty bill for a £1m home from £43,750 down to £28,750, a saving of around a third.
Savills analysis of Land Registry data suggests just under 90% of home sales in England are below £500,000, and would not pay any basic stamp duty. That proportion is highest in the North East, where 97% of transactions fall beneath the new threshold. There are three local authorities with no sales above £500,000 at all in the past year: Copeland, Kingston upon Hull, and Barrow in Furness.
The most significant saving is for home movers, as first-time buyers already have tax relief if they buy a property worth less than £500,000. There were 289,000 mortgaged home movers in 2019/20, according to UK Finance data.
First-time buyers will still benefit, even if they have relief from much of this tax already. More movement among home movers and downsizers will free up much needed housing stock, so there’ll be more homes available for first-time buyers to move into.
Lifting the barriers to moving home will unlock more transactions. That means households can move to areas with stronger, more productive employment markets, which will help the economic recovery. It also means we can expect more spending on removals, furniture, and decorating, all of which will help boost the economy further.
Investors and second home buyers will still have to pay the Higher Rate for Additional Dwellings (HRAD), which is 3% of the property value. However, these buyers still benefit from the higher nil rate for basic stamp duty. Someone buying a second home worth £500,000 would pay £15,000 in stamp duty, half the £30,000 bill they would have paid before today.
The holiday will last until 31st March 2021.
Stamp duty
|
House value (home mover) |
Nil rate at £125k |
Nil rate to £500k |
Saving |
|
£200,000 |
£1,500 |
£0 |
£1,500 |
|
£350,000 |
£7,500 |
£0 |
£7,500 |
|
£500,000 |
£15,000 |
£0 |
£15,000 |
|
£750,000 |
£27,500 |
£12,500 |
£15,000 |
|
£1,000,000 |
£43,750 |
£28,750 |
£15,000 |
|
£1,500,000 |
£93,750 |
£78,750 |
£15,000 |
|
£2,000,000 |
£153,750 |
£138,750 |
£15,000 |
|
£3,000,000 |
£273,750 |
£258,750 |
£15,000 |
|
£5,000,000 |
£513,750 |
£498,750 |
£15,000 |
Calculate the Stamp Duty payable on a residential purchase in England or Northern Ireland