Stamp duty holiday: how to calculate how much you’d save

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HOME buyers could save thousands if a stamp duty holiday is announced by Rishi Sunak tomorrow.

The Sun revealed exclusively over the weekend that a stamp duty holiday was on the cards for six months to help boost property sales.

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But while the shake-up was expected to take place from the Autumn, it’s now thought it will take force tomorrow with the chancellor planning to announce it it in his mini-Budget tomorrow.

Under the measures, it’s though the stamp duty-free threshold for most homebuyers in England and Northern Ireland will rise from £125,000 to up to £500,000.

Campaign group the Home OwnersAlliance (HOA) says this will save almost 900,000 people from forking out on stamp duty, and the saving could be as large as £30,000 for some.

We take a look at how much you could save, and how to calculate any potential savings.

Just bear in mind that this article applies to England and Northern Ireland only as stamp duty rates differ in Scotland and Wales.

How much you could save from not having to pay stamp duty depends on how much the house costs, and whether or not it’s a second property, but it could be tens of thousands.

We don’t know yet exactly what the government is planning, but a home mover purchasing a house costing a typical £320,000, for example, would save £6,000 if the stamp duty threshold moves to £500,000, says accountancy and tax firm Blik Rothenberg.

Meanwhile, a downsizer purchasing a new home for £315,000 would save £5,750, according to Blik Rothenberg.

Of course, this assumes the asking price hasn’t been jacked up as a result of any savings the seller knows buyers are making – something experts say could happen.

When it comes to first-time buyers, as of November 2017 they already get the first £300,000 of purchases stamp duty free on properties costing up to £500,000.

So they’ll only make a saving if stamp duty rises to £500,000 and the property they’re buying costs between £300,001 and £500,000.

In this scenario, a first-time buyer who bought a property for £500,000 would save £10,000, Peter Gettins of mortgage broker L&C Mortgages, told the Sun.

We don’t know yet whether any shake-up will affect those buying additional homes, such as people with a holiday home or buy-to-let landlords.

Here you currently pay a 3 per cent surcharge on top of the usual stamp duty rates, which means you could save a whopping £30,000 on properties costing £500,000 if a stamp duty holiday is introduced.

To calculate how much you could save you need to compare how much stamp duty you’d pay under the current system compared to the proposed change.

Assuming you’re purchasing a home in England and Northern Ireland that will be your only property, here are the current stamp duty rates – add on 3 per cent at every stage if you’re buying an additional property:

So, say you’re a home mover buying a home for £320,000. In this scenario, you pay nothing on the first £125,000.

On the chunk between £125,000.01 and £250,000 you pay 2 per cent. To work this out subtract £125,000.01 from £250,000 to get £124,999.99.

Then divide this figure by 100 to find 1 per cent, and then multiply it by two to get 2 per cent, which is £2,499.99.

Next, you pay 5 per cent on the chunk between £250,000.01 and in this case £320,000. So first, subtract £250,000.01 from £320,000 to get £69,999.99.

Then take this figure and divide it by 100 to get 1 per cent, and then multiply it by five to get 5 per cent, which is £3,499.99.

To find out your total stamp duty bill, you then add together £2,499.99 and £3,499.99 to get £5,999.98.

If the stamp duty free threshold is moved to £500,000 but nothing else changes, you’d pay nothing on the same £320,000 property.

If you’d rather use a tool, you can calculate how much stamp duty you currently have to pay using the Money Advice Service’s free calculator.

This works for first-time buyers, additional home owners, as well as for home movers – and there are separate calculators for Scotland and Wales too where stamp duty rates differ.

The government also has a handy free calculator that tells you how much stamp duty you would pay on a property in England and Northern Ireland only.

This works for first-time buyers, additional home owners, as well as for home movers.

Neither calculator allows you to input the stamp duty rates though, so you can’t use these to calculate what you might pay under any shake-up to the system.

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