fbpx

Stamp Duty Threshold Reductions 2021

Share on facebook
Facebook
Share on twitter
Twitter
Share on linkedin
LinkedIn
Share on email
Email

Every holiday must come to an end

Whilst pandemic-related restrictions have scuppered the holiday plans of most in the UK, the one holiday many in England have rushed to secure has been that of the stamp duty holiday. The government tax break was introduced in England back in July 2020 as the first national lockdown came to an end. The measure, designed to shore up the housing market, has also taken some criticism for fuelling a housing price increase, the fastest increase in over 20 years, potentially driving up inflation.

From July, the threshold above which stamp duty must be paid fell back from the first £500,000 on a purchase to the first £250,000. A cut in the potential saving for buyers in England from £15,000 to £2,500, and one that will be removed entirely from October when the tax holiday is set to come to its full conclusion.

When you look at the spread in the increase in house prices across England there’s an argument that the stamp duty holiday itself was an unnecessary measure that could not consider the motivations behind a potential house buyers’ move; the desire for a larger garden, an extra room to facilitate working from home or a change from crowded city life to the calm of suburbia.

According to Richard Donnell, Zoopla’s Research Director, “In the last 15 to 20 years house moves have been made by young people getting on the ladder then moving through. Now it’s much more driven by older people. Stamp duty is a bonus for them but it’s not the only thing.”

Sales data from HM Land Registry and the Office for National Statistics show that house prices have grown the fastest in areas that have gained the least from the stamp duty holiday. Areas such as the North-East of England which have seen an average annual property price increase of 16.9% yet saw an average saving via the stamp duty holiday of just £380 vs the average of £14,585 in London where the increase in price has been significantly lower at 3.3%.

So, whilst the savings might be coming to an end, perhaps it’s too early to call time on demand.

From 1 October 2021, stamp duty rates are due to return to normal. That means the point at which you start paying stamp duty will revert back to £125,001, as below:

  • £0-£125,000 = 0%
  • £125,001-£250,000 = 2%
  • £250,001-£925,000 = 5%
  • £925,000-£1,500,000 = 10%
  • £1,500,000+ = 12%

Redwood Financial is one of the south’s leading Investments, Pensions, Wills, Trusts & Estate Planning providers and we are dedicated to helping families to grow, protect and enjoy their wealth. With our unrivaled knowledge of Estate Planning, Lasting Powers of Attorney, Probate, Pensions, Savings & Investments, we can advise on any situation.

We are winners of the prestigious Will Writing Firm of the Year 2018, and an approved member of the Trading Standards Buy With Confidence Scheme

Jasmine Lambert Chartered Financial Planner
Jasmine Lambert
Jasmine is the Managing Director and Senior Financial Planner at Redwood Financial. She helps clients manage and grow their wealth and protect their estate. Jasmine also provides expert advice in our FREE Redwood Webinars, where you can learn more about Wills, Trusts and Estate Planning.
Redwood Financial is one of the south’s leading Investments, Pensions, Wills, Trusts & Estate Planning providers and we are dedicated to helping families to grow, protect and enjoy their wealth. With our unrivalled knowledge of Estate Planning, Lasting Powers of Attorney, Probate, Pensions, Savings & Investments, we can advise on any situation.
FREE Public Webinars
Join one of our FREE Public Webinars on Wills, Trusts & Estate Planning.
Request a call back
This website uses cookies to ensure you get the best experience on our website. See Cookie Policy for info.