The Chancellor of the Exchequer delivered his hotly anticipated summer economic update today, announcing a number of measures to help bolster the economy following the impact of COVID-19. George Goward, Managing Director of George Square Financial Management, comments on the key point raised regarding stamp duty land tax (SDLT) changes.
“It will no doubt come as welcome news for prospective house buyers that the Chancellor has announced a temporary change to SDLT, enabling many homes to be taken out of the stamp duty net.
“The new measure, which will see the starting threshold raised from £125,000 to £500,000, will come into force with immediate effect and will run up until to 31st March 2021.
“According to the Chancellor, the average stamp duty bill will fall by £4,500 and almost nine out of 10 people buying a main home this year will pay no stamp duty at all.
“This is an enticing opportunity for first-time buyers too, who are already exempt on the first £300,000 of a purchase. The new £500,000 threshold could see them saving them up to an additional £10,000.
“With the new cut being a temporary measure, we will likely see people to bring forward moves that they might otherwise have delayed. This will not only provide a much-needed boost to the housing market, but will also enable economic activity in other sectors, with people likely to use the tax savings to invest in their new home.”
Other changes announced in the summer economic update include a reduction in VAT from 20% to 5% for the hospitality and tourism sectors and a new ‘Eat Out to Help Out’ scheme, which will see the Government fund 50% discounts (up to £10 per head) at registered businesses for three days a week.