You’ve already made the first great choice – to buy a holiday let in the Lake District which is...
If you’ve been considering buying a holiday let, now is the time. The threshold for paying the Stamp Duty Tax will remain at £500,000 for an extra three months from the original end of March 31st to June 30 2021. Then from June 30th, the threshold will not return to the original £125,000 but will sit at £250,000, allowing more people to purchase a home without the worry of paying the tax upon completion.
Also known as Stamp Duty Land Tax (or SDLT), it is a tax that must be paid when buying a property in England or Northern Ireland. The amount that you pay depends on the purchase price of your property.
Stamp Duty or Stamp Duty Land Tax (SDLT) is a cost a buyer must pay when purchasing a residential property or a piece of land in England and Northern Ireland worth more than £125,000. The charge works on a tiered basis and is only applicable after the minimum threshold price is reached, which increases in relation to the value of the property thereafter.
The normal rate of Stamp Duty
*Stamp Duty guide information from HMRC website prior to changes
A Stamp Duty Holiday is a change to the threshold at which buyers pay tax on purchasing a residential property or piece of land. This change was announced by the UK Government and came into immediate effect on the 8th July 2020 as an economic response to the COVID-19 pandemic.
The changes mean that the threshold at which buyers must start paying Stamp Duty on a property they purchase increases from £125,000 to up to £500,000. This change to the Stamp Duty means that buyers now only start to pay tax on property above £500,000. It is a measure of the severity of the current situation and is designed to support the housing sector through the crisis.
*Stamp Duty guide information from HMRC website detailing reduced rates available until 30 June 2021
Are you thinking of buying a holiday home? Use the HMRC Stamp Duty Land Tax calculator to find out how much tax you can expect to pay.
*Information from HMRC website (2021)
When you buy any property in addition to your main residence, be it a second home, a holiday home or a buy-to-let, there is an additional Stamp Duty charge known as Higher Rates on Additional Dwellings tax (HRAD). This starts at 3% and then rises in bands, climbing to 15% for the most expensive properties. Those purchasing a buy-to-let or second home will also benefit from the Stamp Duty changes and are eligible for the tax cut, but will still have to pay the extra 3% of HRAD charged under the previous rules.
The temporary Stamp Duty thresholds including Higher Rates on Additional Dwellings tax until 30th June 2021
Higher Rates from 1 July 2021 to 30 September 2021
From 1 October 2021 the higher rates will then apply on top of the standard rates of SDLT.
Our helpful and knowledgeable team of local Property Consultants are on-hand to offer any advice and guidance that you may need. They live and work in the area and can advise on great locations to consider. The fact that you are choosing to buy a property in the Lake District, which is the number one location for UK holidays is, of course, an added bonus. (source: Visit Britain 2020)
*At the time of publishing Lakelovers 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.