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Stamp duty holiday and how it works

The Chancellor today announced a stamp duty holiday. Here's how much you can save, what it means for second homes and everything else you need to know about the change...

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The Chancellor announced a stamp duty holiday in July. For a limited time, the level at which stamp duty is charged on a residential property is being temporarily raised to £500,000.

Before this announcement, it is only if you buy a home under £125,000 (or £300,000 for first-time buyers) that you are exempt from paying any stamp duty.

What didn’t make it into the Chancellor’s statement was the fact the government has handed investors and second home buyers preferential treatment as well, with a sizeable cut in the stamp duty surcharges they now have to pay. Second properties purchased below £500,000 will pay a 3% surcharge rather than the usual 5-8%.

When does this stamp duty holiday start?

Immediately. So from today, you won’t need to pay stamp duty on a property below £500,000. This stamp duty cut is in place until 31st March 2021 and an extension to the end of June is expected to be announced. Full details are expected in the Chancellor’s budget on 3rd March.

How much will I save from the stamp duty holiday?

The Chancellor said in his statement that this would mean the average stamp duty bill would fall by £4,500 and that nearly nine out of ten people buying their main home will pay no stamp duty at all.

Those buying a home up to £500k will pay no stamp duty at all.

Buy a home worth more than £500,000 and you’ll pay stamp duty at the normal rate – starting at 5% for properties at £500,001 – £925,000. You can find a full break down of how much you’ll pay and different bands in our guide to stamp duty.

This applies to England and Northern Ireland only.

Does the stamp duty holiday apply to buy to let properties and second homes?

Yes. Second properties under £500,000 would have had to pay a 5-8% surcharge but as of today pay only 3%.

Why has the government introduced a stamp duty holiday now?

It is thought that this would boost the property market and help buyers struggling because of the coronavirus crisis.

Here at the HomeOwners Alliance, we have been campaigning for years to Scrap Stamp Duty altogether on residential properties. We are hoping this is a first radical step in that direction. Hopefully the cut will be extended to become a new norm.

Anything that helps homeowners feel more secure about making a house move after coronavirus has got to be welcome.

However we do question how much this will help first time buyers, currently struggling to save a deposit at a time when 95% mortgages no longer exist. First time buyers are already exempt from stamp duty up to £300,000 in England and Northern Ireland (up to £175,000 in Scotland).

And applying preferential treatment to landlords and second home buyers with cuts to stamp duty on second properties will further disadvantage first time buyers.

We have our fingers crossed that more market activity spurred on by today’s stamp duty cut will encourage lenders to reintroduce a wider range of mortgage products to help those struggling to raise a 10% deposit.

What is stamp duty and when is it paid?

Stamp duty is a tax paid by people when they buy a property. The amount you pay depends on whether you live in England and N Ireland, Wales or Scotland, which stamp duty band your property price falls into, whether you are a first time buyer and whether you are buying your primary residency or a second home. And from April 2021, overseas investors will see an extra 2% levy added to their tax bill.

But the changes announced today only apply to property buyers in England and Northern Ireland. It does not apply in Scotland to those paying the equivalent Land and Buildings Transaction Tax, or in Wales to buyers paying Land Transaction Tax.


Leave a comment (14)* Required

  1. Philip Hibberd

    All these questions and no answers, how is this helpful?

  2. Chris Jones

    My wife has for many years owned a village house near her home city of Amiens in northern France. How does this affect stamp duty on our purchase of a (downsizing for old age) property at £575k completing early March?

  3. Linda Jones

    i need to know is it exchange date or completion date to benefit for the stamp duty payment . as we have been let down by our buyers, buyer our buyer loves our home and has been trying to buy our home but has been let down twice by people lying to them we now will sell our place buy 5th February 2021 and want to buy a house quickly and not lose the stamp benefit as it has not been our fault so please can you tell me if stamp duty holiday is for exchange of contracts or completion our buyers and their buyers will gain from it yet it is their fault not ours so please advise me Thank You Linda E Jones

  4. Stephen

    We are in the process of buying a property, but because the sale of our house fell through we are resorting to a short-term bridging loan. In effect we will be owning two houses until our current is sold (some three weeks later). Can we still claim this stamp duty holiday?

  5. paul mould

    if i buy a house to place in a discretionary trust for my 4 grandchildren. through a limited company , would the purchase fall under the first time buyer category ? giving the purchase stamp duty exemption status, and if not how should the property be purchased to gain stamp duty holiday exemption by 4 under 18 year old’s with there parents as trustees over the property.

  6. David Chadwick

    if I buy some land for £490,000 on the 4 September do I not pay any stamp duty

  7. Andrew Stanley

    What’s the position when you buy and further part of your property that is part buy/part rent?

  8. Rachael

    Unfortunately for us, waiving the stamp duty of properties up to £500k doesn’t benefit us at all. Apparently because we have taken a mortgage holiday due to the pandemic, it’s going against us and we can’t get a mortgage for a new property. Seems absolutely crazy considering my business was forced to close down so we had to take the option of a mortgage holiday that we are entitled to. Are you able to help and advise? Thanks

  9. PETER CROW

    Article is wrong. Stamp duty for a buy to let was 3%. Just bought one at 98k and paid 3%. Rubbish article

  10. Valerie Evans

    Seems totally unfair to the rest of us who paid the previous crippling stamp duty charges, are we also going to receive a refund ?

  11. Annmarie Nicholson

    When is the last time stamp duty will not be paid.?Transactions in place before 31 st March. Or if not complete before 31 st March?

  12. Mark Coyle

    Why can’t Scotland get the same benefits on stamp duty

  13. David

    How does this work with SDLT on staircasing of a shared ownership property?
    I’m looking to purchase an additional 50% share (new total owned = 100%) and I can’t seem to get clarity on whether the ‘Holiday’ would apply or not.

  14. Reji

    Does the stamp duty holiday apply from exchange date or from completion date? There is usually a 14day window to pay stamp duty. If one competed before announcement, could paying it after the announcement allow the reduced stamp duty amount (due to SDLT holiday) to be paid?

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