BRITS could be set for a stamp duty "holiday" in a bid by chancellor Rishi Sunak to boost Britain's housing market.
The temporary measure would remove tax on the purchase of homes of up to £500,000 to help those most in need following the coronavirus crisis.
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The chancellor could unveil the new "stamp duty holiday" as part of his "mini-Budget", which will be delivered in the House of Commons on Wednesday afternoon (July 8).
It is expected to then be implemented in the Autumn budget, which will be delivered this coming October.
It comes as property prices have fallen for the first time in eight years due to coronavirus disruption, with further falls expected.
But how would a stamp duty holiday work and how long would it last? We explain everything we know so far.
What is stamp duty?
STAMP duty land tax (SDLT) is a lump sum payment anyone buying a property or piece of land over a certain price has to pay.
Currently, all house-buyers in England and Northern Ireland must pay stamp duty on properties over £125,000.
The rate a buyer has to fork out varies depending on the price and type of property.
Rates are different depending on whether it is residential, a second home or buy-to-let, or whether you're a first-time buyer.
The current system in England for residential properties means:
- First-time buyers pay nothing on properties below £300,000 (and relief available on properties of up to £500,000)
- You pay nothing if the property costs below £125,000
- You pay 2 per cent if it is worth between £125,001 and £250,000
- You pay 5 per cent if between £250,001 and up to £925,000
- You pay 10 per cent if it is between £925,001 and £1.5million
- You pay 12 per cent on anything over £1.5million
For second homes or buy to let properties:
- 3 per cent on purchases up to 125,000
- 5 per cent on purchases between £125,001 and £250,000
- 8 per cent on purchases above £250,001 and £925,000
- 13 per cent on purchases above £925,001 and £1.5 million
- 15 per cent on purchases above £1.5 million
Stamp duty rates are different in Scotland and Wales.
How would a stamp duty holiday work?
Treasury officials are said to be looking at raising the threshold at which homebuyers start paying stamp duty in England and Northern Ireland.
Currently they don't pay any stamp duty on the first £125,000 of homes, they then typically pay 2 per cent of the value between £125,001 and £250,000, and 5 per cent between £250,001 and £925,000.
One source told The Sun the new stamp duty threshold could be set at £300,000 but it may be set as high as £500,000.
That would enable some homes at the lower end of the housing market in London to be taken out of stamp duty.
It would also take out hundreds of thousands of properties in the crucial "Blue Wall" seats that handed Boris Johnson his election win last year.
The move would mirror the popular measure introduced by ex-chancellor Philip Hammond in 2017 when he removed stamp duty for all first-time buyers on homes under £300,000.
The government hasn't yet officially announced the measures, so we'll update this article once we get more details on how it'd work.
If you're not eligible for stamp duty relief, you must send a stamp duty land tax (SDLT) return to HMRC and pay the tax within 14 days from the date you completed the purchase of your home.
How long would it last?
First revealed in The Sun, sources say the proposals being looked at are only for a six-month holiday, designed to trigger demand.
But The Times reports that the threshold could be increased for up to a year in a bid to help first-time buyers in a difficult market.
How much money would you save?
The average house cost £248,0000 in England in March this year, according to the Office for National Statistics (ONS).
If you purchased the average house as a first-time buyer, you don't have to pay any stamp duty thanks to the relief on homes below £300,000.
But if a first-time buyer bought a property for £500,000, you'd save £10,000 in stamp duty if the threshold increased to £500,000, Peter Gettins of mortgage broker L&C Mortgages, told the Sun.
Home movers who bought the average property for £248,000 would save£2,460 on stamp duty, while Brits buying their second home for the average price tag would save a whopping £9,900.
This assumes the stamp duty holiday will apply to second homes as well as to first-time buyers.
You can calculate how much stamp duty you currently have to pay on the Money Advice Service website.
The government also has a handy calculator that tells you much you would pay on a property.
Last week, Boris Johnson announced an affordable housing plan with 30 per cent discounts for first-time buyers.
But one in seven Help to Buy homes lose value despite local house prices soaring, research found in June.
Meanwhile, we explain what’s next for house prices as first-time buyers fear they will be frozen out of the market.
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