When does the stamp duty holiday end - and could it be extended?

Rishi Sunak is being urged to extend the ‘holiday’ placed on stamp duty tax as the property market struggles to keep up with a surge in demand.

The recent extension of the Help to Buy scheme, coupled with the stamp duty holiday and historically low interest rates have created a window of opportunity for house buyers that many say is likely never to be replicated.

But as the stamp duty holiday edges nearer, trade bodies and property firms have called for an extension to the incentive in a letter to the chancellor.

Here is everything you need to know.

What is stamp duty?

Stamp duty is a tax levied on property purchases.

In England and Northern Ireland, homebuyers are required to pay the tax when they buy a residential property costing more than £125,000. This dips to £40,000 for those buying a second home.

The tax applies to both those who are buying a property outright or taking out a mortgage.

In Scotland, homebuyers are required to pay Land and Buildings Transaction Tax (LBTT) on properties over £140,000.

Stamp duty was originally introduced in England in 1694 as a measure to raise funds for the war against France and applied to property and some documents.

Described as “an act for granting to their Majesties several duties upon vellum, parchment and paper, for four years, towards carrying on the war against France”, the tax proved successful and, due to its efficiency in raising money, has remained in some form ever since.

Through the years the tax has been applied to all manner of objects including dice and playing cards, today it is associated with the purchase of property and stocks and shares.

What is the Stamp Duty holiday?

As part of its Plan for Jobs, the government introduced a temporary stamp duty holiday for residential properties worth up to £500,000 in July 2020.