Chancellor Kwasi Kwarteng’s stamp duty cut and everything you need to know about it

 

Chancellor Kwasi Kwarteng’s stamp duty cut and everything you need to know about it

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On Friday morning, Chancellor Kwasi Kwarteng announced amendments to the Stamp Duty Land Tax as part of his ‘mini budget’.

What is Stamp Duty Land Tax (SDLT)?

When buying a property over a certain price in England or Northern Ireland, you are required to pay a form of tax charged on legal instruments, also known as Stamp Duty Land Tax.
The amount you pay depends on whether the land or property is for residential or non-residential use.
If you purchase a residential property, there are different rates of SDLT, depending if:

  • You’re a first-time buyer
  • You already own a property, and you’re buying an additional property
  • You’re not a UK resident

Different rates apply in Scotland (under the Land and Buildings Transaction Tax) and Wales (Land Transaction Tax)

Changes to SDLT

As the first mini-budget of Prime Minister Liz Truss’ government, Chancellor Kwasi Kwarteng is to raise the SDLT-free threshold from £300,000 to £425,000 for first-time buyers and from £125,000 to £250,000 for everyone else.

In addition, the value of properties upon which first-time buyers (FTBs) can claim relief will also increase from £500,000 to £625,000. This means buyers purchasing a £500,000 property will now be charged £12,500, compared to the previous £15,000.

As these changes come into fruition, the chancellor hopes to remove 200,000 people from having to pay stamp duty on their house purchases and benefit the housing market and the broader economy.
However, many fear that due to the current economic crisis in relation to the rising interest rates, these changes might fall insignificant as mortgage rates continue to increase, thus making houses even less accessible.

How much you will pay?

As of today (23rd September 2022), the stamp duty paid on residential properties in England is as follows:

  • 0%: £0 – £250,000 (£425,000 for FTBs)
  • 5%: £250,000 – £925,000
  • 10%: £925,000 – £1,500,000
  • 12%: £1,500,000+

Therefore, if you spend £250,000 on a property in England or Northern Ireland the recent changes will help you avoid £2,500 in stamp duty charges.

Interested to see how much you need to pay when buying a property? Use the government’s Stamp Duty Land Tax (SDLT) calculator.

Changes in Buy to Let

After the additional 3% surcharge on stamp duty rates for Buy-to-Let in 2016, the same changes will remain under the new higher threshold system. This means you will still have to pay an extra 3% stamp duty n top of the revised rates per band.

Conveyancing Solicitor in Alton

At Bookers and Bolton, our expert conveyancing team will assist you with your property-related enquiry. We will ensure your purchase, sale, or other transaction is as smooth as possible.
Get in touch now on 01420 558 294/295 or enquiries@bookersandbolton.co.uk.

 

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