In Rishi Sunak’s summer Budget statement last week, the Chancellor announced an eight-month holiday for the stamp duty land tax that is usually charged when someone purchases a property in the UK. Previously, the stamp duty land tax excluded first-time buyers up to their first £300,000 when purchasing a home and for those buying a second home, it charged a 3% tax up to the first £125,000 and then 5% between £125,001 and 250,000.
With the new stamp duty holiday, buy to let investors will now see their 3% threshold for stamp duty tax quadrupled to £500,000 from £125,000, only paying the 3% surcharge on their property below £500,000 instead of the previously higher percentage.
Now with the stamp duty holiday, the average stamp duty land tax bill is expected to be cut by £4,500. For an investor, however, purchasing a property valued around £500,000, their stamp duty land tax will be halved from £30,000 to £15,000 payable. Buyers are also in a significantly better position to qualify for mortgages with the new holiday as the reduced stamp duty tax will allow investors to deposit a larger sum of money, decreasing their mortgage repayments.
During this holiday, first-time buyers will lose their stamp duty exceptions and pay the same as next time buyers, with the Treasury estimating a total average of 22% savings for buy to let investors. They have also stated that the reduced tax is judged by the date of completion, meaning if you have only exchanged contracts prior to the announcement last week, you will also save on the stamp duty land tax upon completion.
If you are interested in learning more about how the reduced rate of stamp duty tax can benefit you and your investments, contact us today on +44161 713 3883 or emails us at email@example.com.