What are the new Stamp Duty rates and when do the rules start? Stamp duty cuts explained
Chancellor Kwasi Kwarteng has announced a new ‘mini budget’ – but to say it was mini would be an understatement.
The Chancellor unveiled several details surrounding plans to address the cost of living crisis and the struggling economy, confirming an energy price cap freeze and marking parts of England as low tax ‘investment zones’.
The Chancellor also announced a stamp duty tax cut to encourage and ‘support families to own their own home’.
Here is everything you need to know about the stamp duty cuts, and when they could be put in place…
What are the new stamp duty rates?
Ahead of the cuts, rates of stamp duty were as follows:
- £0 – £125,000: 0%
- £125,001 – £250,000: 2%
- £250,001 – £925,000: 5%
- £925,000 – £1,500,000: 10%
- £1,500,000 and over: 12%
Stamp duty is a one-off tax you pay every time you buy a property or land in England and Northern Ireland.
Following the Chancellor’s announcement, the threshold for the tax will be doubled, meaning there will be no stamp duty tax on the first £250,000 of the property.
What do the cuts mean for first-time buyers?
The rate at which first-time buyers start paying stamp duty will also be raised, this time from £300,000 to £425,000.
Mr Kwarteng will also increase the value of the property on which first-time buyers can claim the relief, from £500,000 to £625,000.
With these changes, the Chancellor has said this would take 200,000 people out of paying stamp duty tax altogether and was a ‘permanent’ cut rather than just a holiday.
First-time buyers have been exempt from paying stamp duty on properties worth up to £300,000 since July 2021.
When do the new rules start?
Chancellor Kwarteng said the cuts are permanent and effective from today – September 23, 2022.
However, there is some concern that the cuts could push already-inflated house prices even higher.
The New Economic Foundation said: ‘A stamp duty cut pushes up house prices further and makes homes in our already overheated market more expensive for people on ordinary incomes.
‘This mainly benefits the wealthiest and puts affordable homes further out of reach for millions desperate for a secure place to live.’
Joshua Raymond, director at financial brokerage XTB, said the cut to stamp duty was ‘absolutely welcome for new prospective buyers’, however it wouldn’t necessarily mean people would pay any less than they are now.
‘With interest rates rising and expected to hit just below 5% by the start of 2023, much of the cut to stamp duty will be quickly absorbed by higher mortgage costs,’ he said.
These cuts will only apply to England and Northern Ireland, with home buyers in Scotland paying land and buildings transaction tax, set by the Scottish government.
In Wales, purchasers pay Land Transaction Tax, set by the Welsh government.
If you want to see how much stamp duty you might have to pay, HMRC have a stamp duty calculator, which asks you questions about the type of property you’re buying and your homeowner status.
Money Saving Expert also has a useful stamp duty calculator.
MORE : What is stamp duty, what are the new rates and how much will I pay?
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