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Chancellor Rishi Sunak has announced a temporary cut to stamp duty in a bid to boost confidence in the housing market in the wake of the COVID-19 pandemic.
Delivering a speech to the House of Commons, as part of his plan to drive economic recovery following the COVID-19 crisis, Mr Sunak said the government will raise the stamp duty threshold from £125,000 to £500,000 effective immediately.
Mr Sunak said: “We need people feeling confident. Confident to buy, sell, renovate, move and improve, that will drive growth, that will create jobs.
“So to capitalise the housing market and boost confidence, I have decided today to cut stamp duty.”
The temporary cut for England and Northern Ireland will run until 31 March 2021 and will see the average stamp duty bill fall by £4,500, Mr Sunak said.
“Nearly nine out of 10 people buying their main home this year will pay no stamp duty at all,” he added.
Policy papers released by the Treasury following Mr Sunak’s speech estimate that the cut to stamp duty will cost £3.8bn.
This figure is based on eligible payments from the Spring Budget 2020 property forecast and the Treasury noted that the final cost will depend on property transactions and price levels.
For additional property purchases, buyers will pay 3% on properties up to £500,000, increasing to 8% on properties up costing £500,001 to £925,000. The next band, up to £1.5m, will have to pay 13% and for properties above £1.5m, the rate will be 15%.
Other buyers will pay 5% stamp duty on transactions between £500,001 to £925,000, 10% from £925,001 to £1.5m, and 12% on payments above £1.5m.