Will The Stamp Duty Holiday Be Extended? | moneyfacts.co.uk

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Derin Clark

Derin Clark

Online Reporter
Published: 04/02/2021

With less than eight weeks until the stamp duty holiday is due to end, consumers in the process of buying a new home may miss out on the tax-reduction and instead find themselves paying out thousands of pounds more than they expected on completion.

Over the last few months, there has been a growing pressure on the Government to extend the stamp duty holiday and some have even called for the tax to be abolished altogether.

With the holiday deadline getting closer, we’ve looked at the possibility of the stamp duty holiday extension and what it means for house buyers if it’s not extended.

Will the stamp duty holiday be extended?

Although the Government has not announced any plans to extend the stamp duty holiday beyond the 31 March 2021, there have been widespread calls for an extension to be considered. Earlier this week, Parliament debated an extension to the stamp duty after a petition calling for an additional six-month extension gained over 140,000 signatures.

There are also signs that property buying boom that took place in the latter half of 2020, which many experts have argued is due to the stamp duty holiday, is starting to fade.

The Nationwide House Price Index showed that during January house price growth slowed to 6.4% from 7.3% in December, while average house prices have fallen by 0.3% month-on-month, from £230,920 in December to £229,748 in January.

Commenting on these figures, Robert Gardner, chief economist at Nationwide, said: “To a large extent, the slowdown probably reflects a tapering of demand ahead of the end of the stamp duty holiday, which prompted many people considering a house move to bring forward their purchase. While the stamp duty holiday is not due to expire until the end of March, activity would be expected to weaken well before that, given that the purchase process typically takes several months (note that our house price index is based on data at the mortgage approval stage).”

Despite the pressure on the Government to extend the holiday, at the time of writing an announcement has not been made, however some are hoping that Chancellor Rishi Sunak will extend the holiday when he announces the budget on 3 March 2021.

What will you have to pay if the stamp duty holiday is not extended?

If the stamp duty holiday is not extended, it will end on the 31 March 2021. This means that house completions after this date may have pay stamp duty on the property purchase (depending on the value of the property they are buying), which could add thousands of pounds to the transaction. A spokesperson for Nationwide told Moneyfacts.co.uk: “There are lots of transactions in the pipeline, so an extension would help to ease the burden across the board. However, we are well prepared to help as many members as possible complete their transaction if there is no extension and are communicating with the other key parties such as solicitors.”

For homebuyers who are unable to complete before the holiday ends, stamp duty is set to revert back to the thresholds it had before the holiday was introduced. As such, those who have owned a property will pay the following stamp duty rates:

 

Property value Stamp duty rate
Up to the first £125,000 0%
£125,001 to £250,000 2%
£250,001 to £925,000 5%
£925,001 to £1.5 million 10%
Above £1.5 million 12%

 

First-time buyers in England and Northern Ireland will pay less or no stamp duty on properties with the purchase price of £500,000 or less. 

You can use our stamp duty calculator to find out what you stamp duty you will currently be charged on your house purchase. You can also read more information about stamp duty in our guide explaining how stamp duty works.

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