27/09/2022
The Chancellor has announced significant changes to the thresholds at which buyers will begin to pay.
The Chancellor through the Treasury declared that his changes will boost household consumption, increase confidence in the economy and support thousands of businesses that rely on the property market. The changes, which come into effect immediately and are also permanent, will assist more people to move, promote investment and in particular, will assist first-time buyers to get onto the property ladder.
What is Stamp Duty?
Stamp Duty Land Tax (SDLT) is the tax paid to His Majesty’s Revenue and Customs (HMRC) on the completion of a residential property purchase in the UK and is dependent on the price paid for the property. SDLT is payable on leasehold and freehold properties.
The changes which come into effect from 23rd Sept 2022 and relate to the purchases of a main residence and only apply to England and Northern Ireland. Separate rates apply in Scotland and Wales.
The price at which Stamp Duty starts to be paid has been doubled from £125,000 to £250,000. If you are a first-time buyer you will now not have to pay stamp duty if the property costs less than £425,000. In a further boost for first-time buyers the discounted stamp duty relief will now apply to properties priced up to £625,000 – an increase from £500,000.
The new rates for England and Northern Ireland are:
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+
What this means to you:
If you purchased a property valued at £250,000 prior to today’s announcement, the amount of SDLT payable would have been £2,500. From today it will be £0.
If you purchased a property valued at £450,000 prior to today’s announcement, the amount of SDLT payable would have been £12,500. From today it will be £10,000 – a saving of £2,500;
If you purchased a property valued at £650,000 prior to today’s announcement, the amount of SDLT payable would have been £22,500 and today is £20,000 – a saving of £2,500;
What does this mean if you are purchasing an investment property or second home:
The changes announced will also have an impact on individuals wishing to purchase an investment property or second home, however, the requirement to pay a second home SDLT surcharge will still apply. Please contact our experts for further guidance and clarification.
What happens if you have already exchanged contracts:
SDLT is payable at the point of completion, therefore even if you have already reached the point of exchange of contracts you will still benefit from the changes announced by the Chancellor.
