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stamp duty on holiday homes

stamp duty holiday

Rishi Sunak, the Chancellor of the Exchequer, announced as part of the government’s summer statement that the thresholds for Stamp Duty Land Tax are to be increased as of July 8th 2020 – this is known as the Stamp Duty Holiday.

From here onwards, those buying primary residential properties will not have to pay any Stamp Duty up to £500,000. This threshold has risen from £125,000, in a bid to encourage people to re-ignite the housing market after the lasting impact that COVID-19 has had on the UK economy.

Discover all that you need to know about the changes to Stamp Duty Land Tax below…

What is Stamp Duty Land Tax?stamp duty land tax

Referred to as Stamp Duty or SDLT for short, Stamp Duty Land Tax is a charge that you must pay when buying a residential property in England or Northern Ireland.

The Stamp Duty rate that you pay depends on how much the property was bought for, and rates are calculated on a tiered basis. Our guide to Stamp Duty tells you all that you need to know.

What was the Stamp Duty change announcement?changes to stamp duty announcement

On July 8th 2020, the British government announced a temporary ease in the Stamp Duty thresholds, in an attempt to reinvigorate the property market following the damaging effects that the coronavirus pandemic has had on the country’s economy.

Previously, properties purchased up to the value of £125,000 did not require any Stamp Duty to be paid. The changes to Stamp Duty rates made by the government have seen this increase to £500,000.

On March 3rd 2021, Rishi Sunak announced that the Stamp Duty holiday would be extended until June 30th 2021 as part of the Budget announcement.

As well as this, it was announced that transitional Stamp Duty rates are to be put in place after June 30th 2021, which will run until September 2021. After this, Stamp Duty rates will return to their original state.

How does the Stamp Duty Holiday effect holiday lets?what are the stamp duty changes

In an attempt to encourage more people to buy properties following the negative impact that COVID-19 has had on the market, the government have increased the price threshold for buyers not being required to pay Stamp Duty.

From the 8th July 2020 until 30th June 2021, buyers of primary residential properties up to the value of £500,000 will not be required to pay Stamp Duty, as opposed to the usual threshold of £125,000.

However, if you’re buying an additional property to your own home, including a holiday let, you will be required to pay an additional charge known as Higher Rates and Dwellings (HRAD) – this charge is 3% of your total property purchase price.

The temporary Stamp Duty thresholds for own homes, applicable until June 30th 2021, are as follows:

Stamp Duty Holiday Rates

Do the new Stamp Duty Land Tax thresholds apply to Wales and Scotland?do wales and scotland pay stamp duty

The Stamp Duty holiday applies to properties in England and Northern Ireland only. This is due to the property tax in Wales and Scotland being different to that of England and Wales.

The tax in Wales is called Land Transaction Tax (LTT), while in Scotland property buyers are required to pay Land and Buildings Transaction Tax (LBTT).

Our Stamp Duty Guide tells you all you need to know about how Stamp Duty in Scotland and Wales differs from England and Northern Ireland.

What will happen to Stamp Duty rates after 30th June 2021?when does stamp duty holiday finish

On the 1st July 2021, Stamp Duty rates will enter a transitional period until 30th September 2021. This will make the threshold for Stamp Duty relief up to £250,000, in between the original rates and the Stamp Duty holiday rates.

Transitional Stamp Duty rates (July 1st-September 30th 2021:

stamp duty transitional rate

On October 1st 2021, Stamp Duty rates will return to their original levels.

Standard Stamp Duty rates:

stamp duty tax rates

Does the Stamp Duty holiday apply to holiday let owners?do you pay stamp duty on holiday lets

Those purchasing holiday lets, buy-to-let properties or second homes can also benefit from these temporarily increased Stamp Duty thresholds.

However, if you are buying a an additional residential property in England or Northern Ireland, you are required to pay a surcharge known as Higher Rates on Additional Dwellings tax (HRAD).

The temporary Stamp Duty thresholds including Higher Rates on Additional Dwellings tax until 30th June 2021 are:

second home stamp duty threshold change

The original HRAD rates for second homes or buy-to-let properties that are set to be re-introduced on the 1st October 2021 are:

second home stamp duty threshold original

* At the time of updating (24th June 2021), Sykes Holiday Cottages has taken all reasonable care to ensure that the information contained in this article is accurate. However, no warranty or representation is given that the information is complete or free from errors or inaccuracies. Generic information is contained within this article and each individual’s tax affairs are different, further advice should be sought from an accountant.

Let your property with Sykes and earn up to £125,000 per year*

  • Join over 15,000 holiday properties already working with Sykes Cottages
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*Based on a 7 bedroom property in the Lake District with bookings between October 2017 to September 2018.

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