With 2020 being such an unprecedented year with the global pandemic, the results on the economy and life in general cannot be overstated. That is why some creative thinking has been needed to get life going again and to stimulate the already bustling property sector. Mark Iddles, Associate Solicitor at Wollens takes a look at the recent changes:
Mark, who works in the Wollens Residential Property department said;
“As a residential practitioner I noticed the almost immediate effect on the property market once restrictions were eased, even slightly and was surprised at the wave of new work that started.
That said, Chancellor Rishi Sunak’s announcement on 8th July went a step further to push the sector in to overdrive! The changing of the stamp duty tax return allowances mean property purchasers can now save a huge chunk towards moving costs. In short a property purchaser who is not classed as a higher rate stamp duty tax payer does not have to pay any tax on a property up to a limit of £500,000. This has been increased from the previous limit of £125,000. This is in place until 31st March 2021. To give an example, the purchase of an family home in March last year costing £350,000 would have incurred a stamp duty tax liability of £7,500. With this new announcement no tax would be payable at all! ”
There are some savings for higher rate tax payers in that an additional 3% surcharge applied across the board on time of the standard rate. Given now that the first £500,000 is not on a £0 charge this means the higher rate comes out with a slight reduction too. Taking the above example of a £350,000 purchase, under the previous rates a tax liability of £18,000 would be incurred, but with the new scheme this is reduced to £10,500. Still a hefty sum but likewise a huge saving.
These changes do not effect first time buyers although the limit on the purchase price before tax is incurred is now up to £500,000.
Keep in mind these changes are only in place until 31st March 2020. It is also worth considering that an average property transaction takes between 6-8 weeks to complete. Therefore to meet this deadline it is sensible to proceed with matters sooner rather than later to ensure you do not miss out.