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Stamp duty calculator: What will the Government cut save you?

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If you buy a property or some land in England or Northern Ireland between July 8th and March 31st, 2021, you will pay a reduced rate of Stamp Duty Land Tax (SDLT).

The government has stepped in and made these rate cuts, which will potentially save most homebuyers thousands of pounds in tax, to try and boost the property market.

Property sales all but came to a complete halt during the lockdown. With the UK recently entering a recession, the government is taking steps to boost the economy – and this move comes as a welcome surprise to home buyers.

Here’s a look at how much money the Stamp Duty cuts could save you:

Property or land purchases up to £500,000

As of May 2020, the average house price in the UK was around £235,000. This means the new rate of 0% for the sale value up to £500,000 is going to mean a lot of homebuyers don’t pay any SDLT.

Previously, Stamp Duty was only 0% for the first £125,000 of a house purchase. Rising to 2% between £125,000-£250,000, then 5% for purchases up to £925,000.

The new tier between £500,000 and £925,000 has also been cut. Buyers will pay 5% for the value of their purchase that falls into this price range.

Once a house purchase reaches £925,000 the rates are the same. It’s important to remember these are tiered brackets, so even on purchases over £925,000 buyers will make substantial savings.

The complete list of the new SDLT rates are:

New stamp duty rates July 8th – March 31st, 2021

Property Price Stamp Duty %

£0-£500,000 0%

£500,001-£925,000 5%

£925,001-£1.5m 10%

Above £1.5m 12%

How much can you save?

Stamp Duty tiers have flat rates, but it’s always advisable you use a Stamp Duty calculator or consult with a tax advisor to check if you’re eligible for any further relief or exemptions.

If we take a standard house purchase of £750,000 as an example:

Between £0-£500,000 there is SDLT of 0% = £nil to pay.

Between £500,000-£750,000 there is SDLT of 5% = £12,500

That’s a total Stamp Duty amount of £12,500.

This would have been £27,500 under the previous rates, meaning you’d save £15,000 if you were to buy a £750,000 home before April of next year.

The total savings you can make between £0-£925,000 (which is the bracket that has a new rate) is £21,250.

How does this affect buy-to-let purchases?

If you’re buying a second home or investment property, you will still make substantial savings under the new rates.

The new rates for buy-to-let and second homes are:

Property Price Stamp Duty %

£0-£500,000 3%

£500,001-£925,000 8%

£925,001-£1.5m 13%

Above £1.5m 15%

Under the previous rate, you would have paid 3% on the first £125,000 of a home and 5% on the next £125,000.

This means, if you bought a £250,000 home before the cuts you would have paid £10,000. Under the new rates, you will pay £7,500.

That’s a saving of £2,500.

There are also some new rates and stipulations relating to companies buying properties. If you’re considering buying a property before April of next year make sure you check with a tax advisor or a Stamp Duty calculator how much you will be saving.

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Lauren Bull is a writer living in Jersey City. If you have a minute, she'd love to be the 18th person to tell you how great The Wire is.

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