From the initial purchase of the house to juggling all the different calculations to find out your investment risk, buying a new house can feel like a never-ending money pit. Things only get worse when you throw in taxes, and few are as notorious as the stamp duty tax.
That said, recent events have made it possible to skip stamp duty UK taxes in full. But what are these taxes, and how can you escape their clutches?
Well, you’re in luck. We’re here to break down everything you should know about relief from stamp duty taxes in the UK when it comes to moving houses! So without further ado, let’s get started!
What Is the Stamp Duty UK Tax?
The stamp duty UK tax is an extra payment you have to make to the government in England or Northern Ireland when you buy a property. The price of the tax varies based on the price you pay for the property (the higher the cost, the bigger the tax). The tax doesn’t apply if you receive the property through any means where the money is not involved (like getting given a house via a will) or if you paid less than 40,000 pounds for the property.
It’s important to keep in mind that the 40,000 rule only applies to freehold properties. Leasehold properties (where a person is allowed to use the property under conditions set by the actual lease owner) don’t get this exception.
The Times Are A-Changing
However, this system changed thanks to a recent announcement made by Rishi Sunak, chancellor of the Exchequer.
He stated that the price limit that the Stamp Duty tax uses has increased. You now need to purchase a property of greater than 500,000 pounds in price before you have to pay the tax.
This move was made by the Exchequer to provide relief to the housing market. This was because moving sales had all but stopped with the advent of COVID-19.
This threshold took effect in July 2020 and is slated to last until March 31st, 2021. As a bonus, people in the middle of buying a property will also get their tax removed if they meet the requirements.
As a result, the amount you get taxed on properties over 500,000 pounds also got altered, with reduced rates to compensate for the new system. The tradeoff is that you can no longer stack certain benefits on to this price change, as their price requirements no longer apply. One example is the program that grants you some tax relief if you are a first-time buyer.
Also, there is an extra surcharge if you are moving into a second property.
So Get Out There and Move
And there you have it! Now that you know all about the stamp duty UK tax and how it affects movers, you’re ready to get out there and nab your dream home!
And if you need any help dealing with mortgage payments or equity release options, give us a call and see how we can help!
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