BRITS have been taking advantage of the government's temporary stamp duty holiday designed to help buyers during the coronavirus pandemic.
Tax on the first £500,000 of a home purchase has been scrapped thanks to the initiative, which was launched by Chancellor Rishi Sunak last year.
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The stamp duty holiday was unveiled as part of the coronavirus "mini-Budget"in July 2020.
The move came as property prices fell for the first time in eight years and the housing market stalled as a result of the first lockdown.
But how does the stamp duty holiday work and when does it end? Here's everything you need to know.
When does the stamp duty holiday end?
The stamp duty holiday is due to come to an end on June 30 2021 after it was extended by three months from the original deadline of March 30.
From July, the tax-free threshold will drop for home buyers to £250,000 until September.
It'll then return to its normal limit at £125,000 from October.
Experts had been calling for a deadline extension to prevent 100,000 property sales from falling through.
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.
Up until July 8 2020, most house-buyers in England and Northern Ireland had to pay stamp duty on properties over £125,000.
This was temporarily increased to £500,000 until March 31, 2021 in the government's mini-Budget in July 2020.
The Chancellor extended the help until September 2021 in his Spring Budget.
The holiday will last in full until June, before being reduced to £250,000 from July.
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 usual 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% if it is worth between £125,001 and £250,000
- You pay 5% if between £250,001 and up to £925,000
- You pay 10% if it is between £925,001 and £1.5million
- You pay 12% on anything over £1.5million
For second homes or buy to let properties:
- 3% on purchases up to 125,000
- 5% on purchases between £125,001 and £250,000
- 8% on purchases above £250,001 and £925,000
- 13% on purchases above £925,001 and £1.5 million
- 15% on purchases above £1.5 million
Stamp duty rates are different in Scotland and Wales.
Experts have warned that millions of sales could fall through if they miss the stamp duty deadline at the end of the month.
In February, a group of backbench Tory MPs launched a campaign in favour of making the relief permanent to stimulate economic growth.
But even though the nine-month stamp duty holiday may have sparked a mini-boom in the housing market, it has cost taxpayers billions.
How does the stamp duty holiday help the economy?
The Treasury announced the stamp duty holiday in a bid to breathe life into the property market after it effectively froze during the first lockdown with viewings, sales and moves suspended.
Experts said a stamp duty holiday would encourage more home owners to move, helping to kickstart economic activity in other sectors.
Recent data from HMRC shows stamp duty receipts hit £6.7billion by the end of January.
This means the last four months’ receipts are at 82% of normal levels in comparison to last year's levels despite the tax holiday.
This could mean that only small changes may be needed in the Budget to get tax revenue from stamp duty back on track.
Speaking at the time the tax relief was revealed, Paul Johnson, director of the Institute for Fiscal Studies, told The Times there was a "good chance" that the policy would benefit the economy in the short term.
He said: "The housing market is very thin… Anything which gets it moving would potentially help."
How much money could you save?
The average house cost £248,000 in England in March 2020, according to the Office for National Statistics (ONS).
If you purchased the average house as a first-time buyer, you wouldn'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 before the June deadline, they'd save £10,000 in stamp duty, 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 a second home for the average price tag would save a whopping £9,900.
Meanwhile, home buyers who purchase a property between July and September will save £2,500 on homes worth both £300,000 and £500,000.
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 how much you would pay on a property.
Here's how you can get on the property ladder with just a 5% deposit by using the new Help to Buy equity loan.
Alternatively, the government is launching a mortgage guarantee scheme for buyers with the same-sized deposits.
Check out our guide to buying your first home, including how much you can borrow and the help available.
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