But some homebuyers who purchased properties during lockdown but before the introduction of the stamp duty holiday in July are now asking whether the holiday can be backdated to the beginning of lockdown and whether they are due a refund.
Let’s find out.
What is the stamp duty holiday?
In essence, it’s a tax break. If the property you’re buying in England and Northern Ireland is worth up to £500,000, you’ll pay no stamp duty. However, if your property is worth more than £500,000, you’ll still have to pay stamp duty.
You will pay 5% stamp duty on the portion of the property price between £500,001 and £925,000. You’ll then pay 10% on the portion between £925,001 and £1.5 million, and 12% on the portion over £1.5 million.
The government introduced the stamp duty holiday in July 2020. Before its introduction, buyers had to pay stamp duty on any property worth £125,000 or more. The exception was first-time buyers, who only paid stamp duty on properties worth £300 000 or more.
What was the purpose of the stamp duty holiday?
The holiday was introduced to boost the property market which had been struggling due to coronavirus. It worked and house prices boomed immediately after the holiday was announced.
With the stamp duty holiday, buyers can save as much as £15,000 when purchasing a home. Of course, that’s a lot of savings which one could otherwise reinvest into other areas like home improvement and maintenance, or use for other expense like home insurance.
The holiday was due to end on March 31. But because of significant delays in the completion of transactions due to lockdown, some house sales currently in the pipeline might not have been completed before the deadline.
Experts had warned that thousands of these sales were at the risk of falling through without an deadline extension. And so the government chose to push the deadline to June to give buyers more time to complete their purchases.
As many as 300,000 additional home purchases could now be able to go through because of the new deadline.
Can the stamp duty holiday be backdated?
Sadly, the answer is no.
The stamp duty holiday only applies to home purchases completed after the chancellor’s announcement on 8 July.
This effectively means that those buyers who purchased properties in the incredibly difficult period between the beginning of lockdown and the day the chancellor announced the stamp duty holiday cannot benefit.
You cannot get a refund for any stamp duty payment you might have made before the announcement.
Several petitions urging the government to consider backdating the stamp duty holiday have been set up. None, however, has garnered the 10,000 signatures needed to oblige the government to respond. The chancellor has also not shown any indication that he might backdate the scheme.
At this point, the chances of the government bowing to pressure and making the scheme retrospective to help out those who completed purchases before the stamp duty holiday began are very low.
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