Stamp Duty Land Tax: ANOTHER Covid Update (Thanks Rishi!)

Rishi Sunak has announced a temporary holiday on stamp duty on the first £500,000 of all property sales in England and Northern Ireland (but not Scotland and Wales as they operate a different system).

In effect, this means that the threshold on which no tax is charged has been temporarily raised until March 2021 from £125,000 to £500,000 to boost the property market and help buyers struggling because of the COVID crisis.

It is unclear (at the moment) as to whether this will apply to second homes or properties purchased through a company, and I for one will be astounded if it does. However, the documents from today's speech do state:

"Temporary Stamp Duty Land Tax (SDLT) cut – The government will temporarily increase the Nil Rate Band of Residential SDLT, in England and Northern Ireland, from £125,000 to £500,000. This will apply from 8 July 2020 until 31 March 2021 and cut the tax due for everyone who would have paid SDLT. Nearly nine out of ten people getting on or moving up the property ladder will pay no SDLT at all."

Regardless of that, the surcharge will still very much apply, so the 3% rate will still get charged on second homes and company purchases of residential property as it is only the nil rate band that is being amended, not the rate itself.

Chancellor Rishi Sunak said: "The average stamp duty bill will fall by £4,500. And nearly nine out of 10 people buying a main home this year, will pay no stamp duty at all."

So the more you pay - up to the new £500,000 threshold - the more you could save on stamp duty. For example, before the stamp duty holiday, if you bought a house for £275,000, for instance, the stamp duty you'd have had to pay would have been £3,750.

• 0% duty on the first £125,000;
• 2% on the next £125,000, so £2,500; plus
• 5% on the final £25,000, so £1,250 (a total of £3,750).