Stamp duty holiday explained

The Chancellor’s stamp duty holiday gave the UK property market a much-needed boost during the COVID-19 pandemic. But now the tax relief for home buyers has ended. We look at how the stamp duty holiday worked and the current rates of stamp duty.

The Chancellor’s stamp duty holiday gave the UK property market a much-needed boost during the COVID-19 pandemic. But now the tax relief for home buyers has ended. We look at how the stamp duty holiday worked and the current rates of stamp duty.

Daniel Evans
Head of Mortgages
5
minute read
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Posted 8 OCTOBER 2021

Stamp duty update

The stamp duty holiday ended on 30 September and rates have now gone back to what they were before the holiday.

See more on how stamp duty works

Work out how much you’ll need to pay with our stamp duty calculator.

What is stamp duty?

Stamp Duty Land Tax (SDLT) is a tax you have to pay when buying a property over a certain price threshold in England and Northern Ireland.

Scotland and Wales have slightly different tax systems. In Scotland, buyers pay Land and Buildings Transaction Tax, while buyers in Wales pay Land Transaction Tax.

The property price threshold – over which buyers in England and Northern Ireland must pay SDLT – is £125,000, or £300,000 for first time buyers.

What was the stamp duty holiday?

The stamp duty holiday was introduced in July 2020, then extended until 30 June 2021, to help homebuyers and to boost the UK property market during the COVID-19 pandemic.

This meant that buyers completing a purchase on a property for less than £500,000 before 1 July 2021 didn’t have to pay stamp duty.

The government introduced the holiday in the hope that people would feel more confident about buying, selling and renovating, in turn supporting jobs and driving economic growth.

Stamp duty went back to normal rates in stages. From 1 July to 30 September, it was payable on the cost of properties above £250,000. Then, from 1 October, it reverted to pre-holiday rates, starting at £125,000.

Use our stamp duty calculator to work out how much SDLT you may need to pay.

Stamp duty rates from 1 October 2021

Now the holiday has ended, stamp duty rates have returned to what they were before the change on 8 July 2020. If the property you’re buying is your main home, rates are as follows:

Property price Stamp duty rate
up to £125,000 Zero
portion from £125,001 to £250,000 2%
portion from £250,0001 to £925,000 5%
portion from £925,001 to £1.5 million 10%
remaining amount above £1.5 million 12%

For example, if you buy a house for £750,000, the SDLT will be:

  • 0% on the first £125,000
  • 2% on the next £125,000 = £2,500
  • 5% on the remaining £500,000 = £25,000
  • Total SDLT = £27,500

If you’re buying an additional residential property, for example a holiday home, you’ll usually have to pay 3% on top of SDLT rates. There are also different rules and rates if you’re buying a shared ownership property.

Stamp duty rates for first-time buyers from 1 October 2021

If you’re buying a home for the first time from 1 October 2021, stamp duty rates will be:

Property price      Stamp duty rate
up to £300,000 Zero
portion from £300,001 - £500,000 5%
portion from £500,001 - £925,000 5%
portion from £925,001 - £1.5 million 10%
remaining amount above £1.5 million 12%

How did the stamp duty holiday affect house sales?

Unsurprisingly, the potential savings gained from the stamp duty holiday led to a buying frenzy.

After the introduction of the stamp duty holiday in July 2020, house sales rose by 15.6% in August and a further 21.3% in September 2020.

The temporary stamp duty changes in 2020 also led to a rise in house prices, giving a much-needed boost to the property market, which slumped during lockdown.

In April 2021, the Office for National Statistics (ONS) reported the average house price in England had risen by 8.9% over the year to £268,000, with that month showing house price growth slow for the first time since July 2020. By July 2021, the average house price was £256,000.

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