Housebuyers have been warned that changes to Stamp Duty rules this week could cost them dearly.
Francesca Hutcheson, Tax Director here at Dyke Yaxley Chartered Accountants, says the deadline for the phased ending of the current Stamp Duty Land Tax holiday had now passed.
“During the tax holiday, buyers did not pay Stamp Duty on the first £500,000 of the purchase price of a property – and that figure was significantly higher than the average price of a home in the UK.
“But from the start of July, the threshold has now dropped to £250,000, and from October 1, it goes back to £125,000.
“This means any buyer who has missed the deadline for completion now risks paying an extra £15,000 in Stamp Duty Land Tax on top of the purchase price.”
Francesca says the tax holiday was introduced in July 2020 as part of the Government’s response to the Covid-19 pandemic, and had been originally due to expire on March 31 this year before it was given a last-minute extension in the Spring Budget.
“If you are in the process of buying a house, and you’ve missed the deadline, the next best option is to work towards ensuring the deal goes through before the October decrease otherwise you’ll be facing even greater costs.
“Agents and conveyancing solicitors have seen a huge boom in property transactions all trying to lock in the tax saving before the deadline, but sadly for some, the timing of their completion process means they will miss out.
“Removal companies have also reported a surge in bookings for this week as house buyers aim to complete in time, but not everyone will have beaten the cut-off point.
“Any buyers near their borrowing limit who have missed the deadline could find they are unable to fund the extra cost of the property tax which could lead to chains breaking down and deals falling through.
“But on the flip side, the changes could lead to a stabilisation of the property market with perhaps more people staying put and improving or extending their existing properties rather than a costly move up the ladder.
“Time will tell – but if you’re unsure of how the revised rules may affect you, it’s important to seek professional advice at the earliest opportunity to make sure you’re complying with the very latest criteria.”