Everything you need to know about the Stamp Duty holiday 2020

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Chancellor Rishi Sunak has announced a Stamp Duty holiday on all homes worth under £500,000, in a move designed to kickstart the housing market which has stalled because of the coronavirus.

The Stamp Duty holiday comes in the form of a temporary increase to the threshold the tax is levied at, until 31 March 2021.

Currently, buyers pay Stamp Duty of 2% on properties worth between £125,001 and £250,000, and 5% on those worth between £250,001 and £925,000.

However, the starting threshold on all sales taking place between 8 July 2020 and 31 March 2021 will increase to £500,000. Stamp Duty of 5% will be payable on properties between the new starting threshold and £925,000.

It is estimated that the move will help nine in ten homebuyers and save them an average of £4,500 on their purchase.

To help you understand how the Stamp Duty holiday 2020 works, we’ve produced this handy guide.  

What is Stamp Duty?

Stamp Duty, or Stamp Duty Land Tax, is the tax paid by people buying land or property in England and Northern Ireland. It is called the Land and Buildings Transaction Tax in Scotland, and the Land Transaction Tax in Wales.

Stamp Duty would usually be levied on all properties worth more than £125,000, although first-time buyers pay no Stamp Duty unless the property they are buying costs more than £300,000.

Stamp Duty starts at 2% for properties worth between £125,001 and £250,000 and increases on a sliding scale the more a property is worth.

What is the Stamp Duty holiday?

In response to the impact the coronavirus pandemic has had on the housing market, Chancellor Rishi Sunak has announced that the threshold at which Stamp Duty is payable at is increasing from £125,000 to £500,000 on all properties purchased between 8 July 2020 and 31 March 2021.

It means that homebuyers will pay no Stamp Duty on properties worth up to £500,000 during the Stamp Duty holiday period.

The move, which will apply only to buyers in England and Northern Ireland, was made to boost flagging demand and preserve jobs in the property sector.

It will also help to stimulate demand for plumbers, electricians, joiners, and DIY and homeware retailers.

How will the Stamp Duty holiday affect me?

There are two main benefits to the Stamp Duty holiday, which will help most buyers.

Firstly, it will mean that buyers will be able to look at more expensive properties without having to find the money to pay Stamp Duty.

Secondly, it may make it easier for people to get a mortgage and save a bigger deposit, because any of the cash they may have previously needed to set aside to cover Stamp Duty could be put towards their deposit instead.

Since the start of the coronavirus pandemic, some lenders have changed their Loan to Value ratios on certain mortgage deals, meaning buyers need to find a bigger deposit, so the Stamp Duty holiday could help with that.  

It may also help buyers to cover their moving costs more easily as well. Again, any savings made to Stamp Duty can be put towards legal or removal fees, home improvements and new furniture etc.

However, it’s worth noting that the Stamp Duty holiday will apply only to properties purchased between 8 July 2020 and 31 March 2021. If your house purchase went through before the holiday started, you will still be liable for any Stamp Duty that might be charged.

How will the Stamp Duty holiday affect buy-to-let and investment properties?

Although the Stamp Duty holiday is aimed primarily at helping first-time buyers and home movers, property investors and those buying second homes may also benefit.

Since April 2016, anyone purchasing a property in addition to their main home, like a buy-to-let property, holiday let or a second home, has had to pay an additional 3% Stamp Duty premium. 

It meant they would pay 3% Stamp Duty on properties worth up to £125,000, 5% on those between £125,001-£250,000 and 8% on those between £250,001-£925,000. 

However, the Stamp Duty holiday means those purchasing investment properties will now pay 3% on purchases up to £500,000 and 5% between £500,001 and £925,000.

According to the new thresholds, someone purchasing an investment property worth £500,000 will now be liable for £15,000 in Stamp Duty, instead of the usual £30,000.

How much does Stamp Duty usually cost?

In England and Northern Ireland, the following Stamp Duty rates usually apply:

Property value

Standard Stamp Duty

Up to £125,000










So, the Stamp Duty ordinarily payable on a house worth £250,000, which is just above the UK average, would be £2,500. It would usually be £15,000 (£2,500 at 2% on the first £125,000, plus £12,500 at 5% on the next £250,000) on a house worth £500,000.

Learn more

With the Stamp Duty holiday in place until 31 March 2021, buying a home might be a more attractive proposition than it was a few weeks ago. If you are looking for a mortgage and want to know your options and how the Stamp Duty holiday might affect you, My Mortgage Pro can help.

We can connect you with an expert mortgage broker who can find the best solution.

To find out more, fill out the form below to request a call and we’ll be in touch.