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Stamp duty holiday extension: How long the scheme was extended in Budget 2021, and when will end

The i 04/03/2021 Zlata Rodionova
a rainbow over a city: Under the scheme anyone who purchases a property that completes by 31 March will only have to pay tax on the amount over £500,000 (Photo: Reuters) © Provided by The i Under the scheme anyone who purchases a property that completes by 31 March will only have to pay tax on the amount over £500,000 (Photo: Reuters)

Chancellor Rishi Sunak confirmed a long-awaited extension to the stamp duty holiday when he outlined his Budget on Wednesday.

Under the scheme, introduced by the Government in July last year, anyone who purchases a property only has to pay tax on the amount over £500,000.

The tax break has helped to drive a boom in property prices, and a number of estate agents and homebuyers have long been calling for the measure to be extended.

Mr Sunak duly confirmed that the tax break will remain in place, before being tapered off later this year – here’s everything you need to know.

What is stamp duty?

Stamp duty, also known as Stamp Duty Land Tax (SDLT), is a tax on property or land bought in England and Northern Ireland.

The rate of stamp duty ranges from 2 per cent to 12 per cent of the purchase price, depending upon how much the property costs, the purchase date and whether you are a first time buyer or multiple home owner.

England and Northern Ireland have the same rates, while Scotland and Wales have their own taxes on land, which are called Land and Buildings Transaction Tax (LBTT) and the Land Transaction Tax (LTT), respectively.

There are a number of helpful Stamp Duty calculators to help you work out how much you could be liable to pay. For example you can try this one from the Money Advice Service.

When does the Stamp Duty holiday end?

The stamp duty holiday was set to end on 31 March 2021, with its popularity leading to a backlog of sales waiting to be completed.

When Mr Sunak announced the extension in his Budget speech, he cited “the sheer volume of transactions” as a motivating factor.

He therefore announced that the £500,000 nil rate band will remain in place until 30 June, giving buyers three more months to complete.

After this date, “to smooth the transition back to normal,” the threshold will be reduced to £250,000 until 30 September. The stamp duty nil rate band will then return to its previous nil rate band of £125,000 from 1 October.

It comes as the average UK house price hit a new record high of £231,068 in February, according to figures from Nationwide.

Property values climbed by 6.9 per cent annually, up from 6.4 per cent in January, in what the Nationwide Building Society House Price Index described as a “surprise” acceleration.

Robert Gardner, Nationwide’s chief economist, said: “This increase is a surprise. It seemed more likely that annual price growth would soften further ahead of the end of the stamp duty holiday, which prompted many people considering a house move to bring forward their purchase.”

He added: “Many people’s housing needs have changed as a direct result of the pandemic, with many opting to move to less densely populated locations or property types, despite the sharp economic slowdown and the uncertain outlook.”

What has been the reaction to the extension?

Estimates suggested that an additional 300,000 transactions in England could benefit from the decision by the end of June.

Rightmove also suggested that buyers could save £1.75 billion in total, with 45 per cent of transactions in England still exempt from stamp duty in the tapering period.

Within minutes of the extension being announced, there were signs of house hunters rushing to see the properties available online.

Property professionals said the announcement will be a “huge relief” to those who had been stuck in transaction bottlenecks, saving them thousands of pounds.

Rightmove property expert Tim Bannister said: “This three-month extension will come as a huge relief for those people who have been going through the sales process since last year and were always expecting to make use of the stamp duty savings.”

Richard Donnell, research director at Zoopla, said: “Buyers who are now looking for a new home could benefit from the full savings of up to £15,000 if they complete their sale within less than four months.”

Additional reporting by Press Association

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