Whether you’re a first-time buyer, homeowner, or landlord, here are some initiatives and allowances you could benefit from before 5 April.
1. Stamp duty
You could save up to £15,000 in tax if you buy a home before the stamp duty holiday ends on 31 March.
Chancellor Rishi Sunak raised the threshold at which stamp duty applies to £500,000 last July, meaning that nearly nine out of 10 transactions are no longer subject to stamp duty.
With many buyers rushing to beat the stamp duty deadline, the conveyancing process – in other words, the legal work associated with buying property – has got longer.
But there are ways to boost your chances of securing a quick sale, such as buying a new-build home direct from a house builder or bidding on property at auction. And there are steps you can take to help the conveyancing process go as smoothly as possible.
Normal stamp duty rates will apply after the deadline has passed. However, first-time buyers will still be exempt from stamp duty on the first £300,000 of a property purchase for homes costing up to £500,000 once the holiday ends.
It’s also worth noting that if you are currently living overseas and want to buy a property in England or Northern Ireland, you have until the end of the current tax year to beat a new stamp duty surcharge for non-residents.
From 1 April, all buyers who are not UK residents will have to pay additional stamp duty of 2% on the entire purchase price of their property.
As a result, if you are buying a £250,000 home you will have to pay an extra £5,000, on top of the basic stamp duty of £2,500, to give a total of £7,500.
2. Help to Buy equity loan scheme
The Help to Buy equity loan scheme in its current form enables you to buy a new-build home with just a 5% deposit, which the government tops up with a 20% five-year interest-free equity loan.
The initiative will close on 31 March and be replaced with a new version of the scheme, which will only be available to first-time buyers.
Regional price caps on the maximum value of properties that can be bought using the scheme are also being introduced.
3. Mortgage payment holidays
While you can benefit from deferring your mortgage payments until 31 July, lenders have warned that you must apply for one of the mortgage payment holidays before 31 March.
The scheme enables you to defer mortgage payments for up to six months, although if you are applying for your first holiday, now you will only be able to defer them for up to three months.
You will not have to pay anything during the payment holiday period, but interest will continue to accrue and will be added to the total amount you owe.
The mortgage payment holiday scheme, which had been due to end on 31 October 2020, was extended for a further six months as the UK continued to suffer economic fallout from the coronavirus pandemic.
4. ISA allowance
If you are saving for a housing deposit, make the most of your ISA allowance. You can save up to £20,000 in the current tax year and this can be split between different ISAs.
If you have a Lifetime ISA, which is aimed at first-time buyers and pension savers, you can save up to £4,000 into it each tax year.
The government contributes 25p for every £1 you save, meaning the maximum amount will earn you a tax-free bonus of £1,000.
5. Lifetime ISA charge relaxation
To help people who need to tap into their savings during the pandemic, the government reduced the withdrawal charge for money taken out of a Lifetime ISA from 25% to 20% between 6 March 2020 and 5 April 2021.
The tax-free savings accounts, which can be opened by people aged between 18 and 39, can be used to save for a deposit for a first home or for retirement.
The exit penalty for any withdrawals that are not used to buy a property or fund retirement will revert back to 25% after 5 April.
6. Capital gains allowance
If you’re selling a second home or investment property, you could be liable for capital gains tax, charged at a rate of 18% for basic rate taxpayers and 28% for higher rate ones on any gains made.
But everyone has an annual capital gains tax allowance, which for the 2020/21 tax year is £12,300, rising to £24,600 for assets that are jointly owned by a couple.
If you have sold a property during the past year, remember to offset any profits against this allowance.