Stamp Duty extension: Will Rishi Sunak extend the Stamp Duty holiday?

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The Stamp Duty holiday was implemented in 2020 in a bid to help kickstart the economy which had been hugely impacted by the coronavirus pandemic. The Chancellor of the Exchequer Rishi Sunak is reportedly mulling over an extension to the Stamp Duty holiday according to reports.

Stamp Duty is a land tax payment which is charged to those buying property or land which costs more than a set amount. 

This tax is only charged when you buy property in England or Northern Ireland.

Stamp Duty Land Tax will now be paid at a reduced rate until March 31, 2021, meaning you do not pay Stamp Duty if the amount you pay for your main home is under £500,000.

If you are purchasing additional properties you will still have to pay an extra three percent in Stamp Duty on top of the revised rates for each band.

In Scotland and Wales similar property taxes are charged, but this is not specifically called Stamp Duty Land Tax.

The Stamp Duty rates are as follows according to property prices:

  • £0 to £500,000: Zero percent Stamp Duty

  • £500,001 to £925,000: Five percent

  • £925,001 to £1.5m: 10 percent

  • More than £1.5m: 12 percent.

Mr Sunak is reportedly considering extending the Stamp Duty holiday by another six weeks.

This move could be undertaken to prevent tens of thousands of homebuyers being caught in a “completion trap”.

The extension would see the holiday last through to mid-May.

The Daily Telegraph said he opposes calls for a longer six-month extension due to the “gratuitous” impact this would have on tax receipts, with the Exchequer desperate to recuperate revenues depleted by various tax breaks.

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The pandemic has slowed the sales process and has forced some buyers to wait months for property transactions to complete.

The tax relief implemented last year has helped house prices surge to record highs.

The average house price fell for the first time in months in January, despite a last-minute rush to take advantage of the stamp duty holiday.

The 0.3 percent drop marked the biggest monthly fall since April 2020, although typical house prices are still £13,000 higher, according to the latest Halifax house price figures.

A source told the Telegraph: “It is certainly the case that a lot of people would be caught in the completion trap if the holiday were to end when it is due to.”

Will the Stamp Duty holiday be extended?

A Treasury spokesman said: “We do not comment on future tax policy outside of fiscal events.”

Currently, stamp duty thresholds are due to revert to the original thresholds.

According to the Telegraph, Mr Sunak is said to have rejected an extension longer than six weeks.

The Chancellor has insisted the UK must return to “sustainable” levels of government spending ahead of his Budget on March 3.

This week, homebuyers using the Help to Buy equity loan scheme in England received a boost when they learned they are being given an extra two months to legally complete their purchase, due to delays caused by coronavirus.

Homes England said the scheme will end on March 31, 2021, but those who are currently using it will have more time to get the keys to their home.

The website reads: “We are extending legal completion to May 31, 2021, due to delays caused by coronavirus.

“This allows an extra two months for home builders to complete the build and for homebuyers to legally complete and get the keys to their home.

“There will be no more extensions, so we are asking home builders to continue to build at pace.

“Please check with your home builder and conveyancer that you’re able to meet these dates.”

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