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Jul 09

The Stamp Duty Suspension Explained

Reading Time: 5 mins

The Chancellor announced significant changes to Stamp Duty Land Tax in his summer statement this week. But what does it actually mean for property buyers in England and Northern Ireland?

From saving thousands of pounds to the anticipated impact on the property market, keep reading to find out what the Stamp Duty changes could mean for you.


What Is Stamp Duty?

What is the Stamp Duty holiday?

Stamp Duty Land Tax (SDLT) is paid by those buying property. It’s a percentage of the final sale value of the property, and is paid to the Government.

The rate is tapered, so you pay a higher percentage on more expensive properties. First-time buyers typically get a better rate on their purchase – but the new, temporary, changes make things a bit different.

The Old Stamp Duty Rates

Stamp Duty is paid on the sale of a property by the person buying it (not the seller). It used to be set at 0% for properties valued up to £125,000, with a tapered amount added for values above that. You’d pay the percentage of each level, rather than just the highest percentage based on the value of the property.

Price Bracket

Old Stamp Duty Percentage

£0 to £125,000 0%
£125,001 to £250,000 2%
£250,001 to £925,000 5%
£925,001 to £1.5m 10%
Over £1.5m 12%


So, if you bought a house worth £245,000, you’d pay 0% on the first £125,000. Then you pay 2% on the remaining £115,000 – meaning a SDLT bill of £2,300.

First-time buyers get an extra allowance. They don’t pay any SDLT on the first £300,000 of properties worth up to £500,000.

The New Stamp Duty Rates

This is a temporary measure to help kickstart the property market in the UK. So, the new rates introduced by Rishi Sunak this week are only for properties purchased before 1st April 2021.

Between now and then, people buying a residential property (or land) that isn’t for a buy-to-let won’t have to pay a penny of SDLT on prices up to £500,000.

So, the new rates for first-time buyers and those moving house look like this:


Price Bracket

New Stamp Duty Percentage

£0 to £125,000 0%
£125,001 to £500,000 0%
£500,001 to £925,000 5%
£925,001 to £1.5m 10%
Over £1.5m 12%


So, even if you’re buying a house priced over £500,000, you’re saving significant chunks of money! Remember, this is only for purchases completed by 1st April 2021 – it doesn’t count for any transactions in the exchange process on this date.

Stamp Duty Changes for Buy-To-Let Landlords

Buy-to-let properties and second homes (or land) come at a premium. There’s no 0% band. Instead, buyers have to pay SDLT rates at:


Price Bracket

buy-to-let Stamp Duty Percentage

£0 to £500,000 3%
£500,001 to £925,000 8%
£925,001 to £1.5m 13%
Over £1.5m 15%


The SDLT holiday rates also apply in some way to those planning to buy properties as rental investments. So, there is still a 3% surcharge on the first £500,000 – to recognise the premium of owning two or more properties. The Stamp Duty Changes for investors means that they no longer have to pay 5% on properties between £125,001 – £250,000, or 8% on properties between £250,001 – £500,000.

Land and Buildings Transaction Tax in Scotland

The property market works differently in Scotland, and the Stamp Duty Land Tax holiday only applied to England and Northern Ireland.

However, Scottish property buyers will benefit from a similar tax holiday, although to a lesser degree. Until 31st March 2021, Land and Buildings Transaction Tax (LBTT) only applies to property transactions over £250,000. This is a temporary raise from the usual £145,000 limit. Buy-to-let or second properties also benefit – but must pay the 4% surcharge still.

The date for the temporary change isn’t yet in place – the Scottish Government says ‘as soon as possible’. If you’re planning to complete a property transaction soon, see if you can hold off until this temporary change is official!

What the Changes Could Mean for the Property Market

How will the Stamp Duty holiday affect the property market?

Coronavirus lockdown meant nobody could move house for months. That created a temporary sudden demand once the Government said property viewings and transactions could go ahead again. The market saw a quick spike in interest.

However, ongoing concerns about getting mortgages after (or while) you’re on furlough, the wonky economy meaning potential redundancies, and people waiting for the SDLT holiday announcement means the market stagnated. It could be very difficult for people to get mortgages in the near future, especially if the pandemic has affected their credit score through payment holidays or increased debt.

With the SDLT holiday announcement, the property market sprang into action again. Estate agents and mortgage brokers are finding themselves very busy all of a sudden – because there’s now a rush for people to find their next property before 1st April 2021.

However, this rush could mean the market stagnates or even drops again after 1st April 2021. Nobody will want to pay SDLT – it’s a huge cost – so they’ll likely wait to see what happens with house prices. A drop in prices means a drop in the SDLT bill buyers face. Once that happens… demand grows… which drives the market… and property prices go up again! It’s how the cycle works – so you’ve got to time it right (and unfortunately there’s no magic formula for post-pandemic house price estimates).

More property and mortgage tips

If you’ve got money to invest, or want to buy your first home, now is definitely a good time to do it! Read these articles for more property-based tips and advice.


*This is not financial or investment advice. Remember to do your own research and speak to a professional advisor before parting with any money.

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2 years ago

Good article, with clear information.

2 years ago

Great article, it will be interesting to see when tax rate increases. what will be the future to household market.

2 years ago

This article does a great job of explaining a confusing subject. Thanks.

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