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Stamp Duty Holiday: How will it Work?

What is Stamp Duty?

Stamp Duty Land Tax (SDLT) is paid on residential property purchases in England and Northern Ireland. Although discounts are available (e.g. if it is your first home), Stamp Duty is paid in increasing portions based on the property value.

 

Property ValueSDLT Rate
Up to £125,0000
£125,001 – £250,0002%
£250,001 – £925,0005%
£925,001 – £1.5 million10%
Above £1.5 million12%

Stamp Duty is known as Land and Buildings Transaction Tax in Scotland, while in Wales buyers pay what is known as Land Transaction Tax.

 

What is the Stamp Duty Holiday?

The chancellor announced a temporary holiday on stamp duty on 8th July 2020, reliving those of SDLT when purchasing property up to the value of £500,000. The holiday is due to last until 31st March 2021.

 

Property ValueSDLT Rate
Up to £500,0000
£500,001 – £925,0005%
£925,001 – £1.5 million10%
Above £1.5 million12%

 

How will the Stamp Duty Holiday Affect Me?

Almost nine out of ten buyers pay stamp duty under the normal SDLT rules, costing some up to £15,000. With the average detached property in Cockermouth costings £311,507*, West Cumbrian purchasers could save roughly £5,575.33 under the new guidelines.

Overall, the temporary relief on tax is a welcome boost to the property industry and is set to encourage those thinking of selling to act now rather than later. See how much you could save on average:

 

Average Detached Property in Cockermouth

Property PriceTax Band%Taxable SumTax Amount
£311,507*£0 – 125,0000£125,000£0
£125,001 – £250,0002%£125,000£2,500
£250,001 – £925k5%£61,507£3,075.35
 Total Under SDLT:£5,575.35
 Total Under SDLT Holiday:£0

 

Average Semi-Detached Property in Cockermouth

Property PriceTax Band%Taxable SumTax Amount
£216,063*£0 – 125,0000£125,000£0
£125,001 – £250,0002%£91,063£1,821.26
 Total Under SDLT:£1,821.26
 Total Under SDLT Holiday:£0

 

Average Terraced Property in Cockermouth

Property PriceTax Band%Taxable SumTax Amount
£184,917*£0 – 125,0000£125,000£0
£125,001 – £250,0002%£59,917£1,198.34
Total Under SDLT:£1,198.34
 Total Under SDLT Holiday:                               £0

 

For further information, visit: https://www.gov.uk/stamp-duty-land-tax.

 

*https://www.rightmove.co.uk/house-prices/cockermouth.html