Where do we stand with the UK’s property taxes?

Jul 8, 2021

Keeping on top of property taxes within the UK over the last year has been tricky for all, and further changes kicked in this month.

In England and Northern Ireland, the stamp duty land tax holiday taper is now in place before the old regime takes over in the autumn.

Not all buyers can benefit from this interim tax break, while the amount of tax people can save has significantly reduced too.

Around 50,000 buyers might have missed last month's stamp duty land tax deadline as the first cliff edge approached, and another one looms large.

In England & Northern Ireland

Stamp duty land tax only applies in England and Northern Ireland, and this tax-free threshold reduced last month - but not to its previous regime.

The first cliff edge for residential property buyers came and went on 30 June 2021, marking the end of a three-month extension first announced by Chancellor Rishi Sunak on 3 March 2021.

Buyers who completed their purchases before 30 June 2021 avoided having to pay this property tax on the first £500,000 of the property price.

Most of those who missed that extended deadline will now pay stamp duty land tax for residential house purchases above £250,000 for transactions completed on or before 30 September 2021.

Above this threshold, a 5% stamp duty land tax rate applies on the portion of the property price between £250,000 and £925,000.

Those who completed their purchases before the end of June were able to save up to £15,000 on their stamp duty land tax bills, while others who complete on or before 30 September 2021 can only save up to £2,500.

For first-time buyers from 1 July 2021

First-time buyers in England and Northern Ireland, who also benefited from the stamp duty holiday, now pay tax on properties worth more than £300,000. A 5% tax rate applies between £300,000 and £500,000.

For buy-to-let landlords from 1 July 2021

For buyers of additional residential properties in England and Northern Ireland that are not their main residence, the 3% surcharge kicks in on top of stamp duty rates above £40,000.

In Scotland

When the stamp duty land tax holiday was first announced on 8 July 2020, Scotland's land and buildings transaction tax followed suit a week later.

This tax-free threshold increased from £145,000 to £250,000 for residential transactions completed between 15 July 2020 and 31 March 2021.

However, while Westminster was announcing a three-month extension, Holyrood stuck to its original deadline of 31 March 2021.

This means for all residential transactions completed in Scotland in 2021/22, no tax will be owed on the first £145,000 of the property price.

For first-time buyers in Scotland, the tax-free threshold is £175,000.

In Wales

Further south in Wales, an exemption for homebuyers paying tax on properties which cost £250,000 or less also ended on 30 June 2021.

Wales temporarily raised its land transaction tax threshold during the pandemic from £180,000 to £250,000, in line with other UK governments.

The exemption, initially for residential transactions completed on or before 31 March 2021, was then extended to 30 June 2021.

But from 1 July 2021 until at least the remainder of the 2021/22 tax year, the land transaction tax-free threshold in Wales has reverted back to £180,000.

There is no tax relief for first-time buyers in Wales.

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