Today (8th July 2020), Rishi Sunak, Chancellor of the Exchequer, announced a stamp duty holiday for the first £500,000 of a property purchase in England with immediate effect.
Impact on a £500,000 property investment
Stamp duty is calculated as the sum of increasing rates on portions of the overall asking price, rather than a fixed percentage of the total purchase price. Assuming you already own a property, your total stamp duty bill for an additional property in the UK worth £500,000 (which buys a two-bedroom apartment in Zone 3 London) will reduce from £30,000 to only £15,000.
So, in essence, you will save £15,000 on your stamp duty tax bill for all properties worth £500,000 and above until 31st March 2021.
Overseas investors – it’s time to act!
This change impacts overseas investors as well. But there is an extra incentive for them to act now. On the 1st April 2021, not only will stamp duty rates return to pre-holiday levels, the UK government is proposing to leverage a further 2% to rates for overseas investors. This will increase your tax bill on the first £500,000 of your property investment from £15,000 to £40,000.
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