The Stamp Duty holiday which was introduced by the government in July 2020 to boost the property market and help more buyers get on the property ladder has officially ended. From 1 October, stamp duty thresholds in England and Northern Ireland will go back to their pre-pandemic levels.
Below, I explain what the stamp duty rates are going to be from 1 October. I also tell you whether it’s legally possible to avoid paying stamp duty now that the tax break has expired.
Stamp duty holiday: what is changing?
Stamp duty is a tax that you pay when you buy a property or land worth over a certain value in England and Northern Ireland.
Between 8 July 2020 and 30 June 2021, there was a ‘Stamp Duty holiday’ to stimulate the housing market during the pandemic. Buyers didn’t have to pay Stamp Duty on properties worth £500,000 or less. Under the Stamp Duty holiday, buyers could save as much as £15,000 on their home purchase costs.
On 1 July, the Stamp Duty threshold was lowered to £250,000. But as of Friday 1 October, Stamp Duty rates are returning to pre-pandemic levels.
The lower property value threshold at which you pay Stamp Duty will return to £125,000.
How much Stamp Duty will you have to pay now?
Here are the Stamp Duty rates as of 1 October.
|
Property value |
Stamp Duty rate |
|
Up to £125,000 |
0% |
|
Portion between £125,001 and £250,000 |
2% |
|
£250,001 – £925,000 |
5% |
|
£925,001 – £1.5 million |
10% |
|
Above £1.5 million |
12% |
What about first-time buyers?
Despite the Stamp Duty holiday coming to an end, first-time buyers can still benefit from lower rates thanks to a special first-time buyers relief that was already in place. Under this special relief, first-time buyers don’t have to pay Stamp Duty on properties worth up to £300,000.
So, as of 1 October, their rates will be as follows:
|
Property value |
Stamp Duty rate |
|
Up to £300,000 |
0% |
|
Portion between £300,001 and £500,000 |
5% |
|
£500,001 and over |
No first-time buyer’s relief. Buyers pay the standard Stamp Duty |
If you’re trying to figure out how much Stamp Duty you will pay, our Stamp Duty calculator can help.
Can you avoid paying Stamp Duty after the holiday ends?
Stamp Duty can add thousands of pounds to the cost of your new home. Luckily, there are a number of reliefs and exemptions that can help to lower your bill or even help you completely avoid paying the tax altogether.
The first option is to haggle on the price with the seller. If the property price is very close to a Stamp Duty threshold, you can haggle so that the price falls below the threshold, reducing your bill.
If you jointly own a home with a former spouse or civil partner, you can buy their share of the home without it being subject to Stamp Duty.
You can also avoid paying Stamp Duty if someone gifts you a completely mortgage-free property.
Can you get any other help when buying a home?
Yes. There are several government schemes and incentives to help make homeownership a reality.
For example, under the government’s mortgage guarantee scheme that was launched in April 2021, you might be able to secure a mortgage with just a 5% deposit. This scheme is available for properties worth up to £600,000.
You can also get on the property ladder with just a 5% deposit through the Help to Buy: Equity Loan scheme. Under this scheme, which is only available to first-time buyers, the government will loan you up to 20% of the property value (or up to 40% if in London) to boost your deposit.
And if you are currently trying to save up for a deposit, you can speed up the process by taking advantage of a Lifetime ISA. This is a product via which aspiring buyers can save up to £4,000 a year and enjoy a 25% free top-up from the government to use towards the purchase of a home.
A Lifetime ISA is available from a variety of providers, including banks, building societies, and investing solutions companies.
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About the author
Sean is a personal finance writer with a strong passion for helping others become more financially literate and make better financial decisions. He covers everything from credit cards to savings to investing.
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