As part of his ‘mini budget’, Chancellor Kwasi Kwarteng announced this morning a cut to stamp duty – the tax paid when people buy a property in England and Northern Ireland.
The Chancellor announced that the threshold that tax falls due has been raised to £250,000, up from its current £125,000 level. Moreover, for first-time buyers’ the threshold has been increased from £300,000 to £425,000.
Additionally, the Chancellor also increased the value of the property on which first-time buyers (FTB) can claim stamp duty relief from £500,000 to £625,000. Consequently, this means that a buyer spending £500,000 on a home will now be charged £12,500 rather than the previous £15,000.
With these changes, Kwasi has suggested that this permanent cut save around 200,000 people from SDLT each year.
The rates are now:
- 0%: £0 – £250,000 (£425,000 for first-time buyers)
- 5%: £250,000 – £925,000
- 10%: £925,000 – £1,500,000
- 12%: £1,500,000+
To find out how much you would need to pay when buying a property, you can also use the government’s Stamp Duty Land Tax (SDLT) calculator.
Different rates apply in Scotland under the Land and Buildings Transaction Tax and in Wales with the Land Transaction Tax.
The permanent cuts are welcomed up and down the UK. The cuts are set to benefit the housing market and the broader economy, including job and social mobility. However, due to the current economic crisis relating to rising interest rates, housing may remain inaccessible since mortgage rates will continue to increase.
Additional Dwellings and Buy to Let
In April 2016, stamp duty on buy-to-let and other additional properties was reformed, with the addition of a new 3 per cent surcharge on all rates.
This will remain under the new higher threshold system, and you will still have to pay an extra 3% in Stamp Duty on top of the revised rates for each band.
This blog post is not intended to be taken as advice or acted upon. If you are seeking legal advice, please get in touch with our team of solicitors