How has stamp duty changed?
Chancellor Kwasi Kwarteng’s ‘mini-budget’ on 23rd September announced stamp duty cuts for some home-buyers.
Stamp duty is a tax payable to the government when you buy a home, or land, priced above a certain threshold in England or Northern Ireland.
Previously, you would pay stamp duty tax on a home, or the portion of a home, priced between £125,001 and £250,000. Following today’s announcement, no stamp duty is payable below the price threshold of £250,000.
This means a third of all homes currently for sale (33%) are now completely exempt from stamp duty in England, compared to 7% when the threshold was £125,000.
Before the mini-budget announcement, first-time buyers paid no stamp duty on the first £300,000 of a home purchase. This has now been raised to £425,000. And if the home you’re buying is priced below £625,000, you’ll still pay no stamp duty on the portion of the property priced below £425,000, and 5% on the portion priced above this. This is an increase of £125,000 on the previous price cap of £500,000.
These changes reduce stamp duty bills across the board for all home-movers by up to £2,500, and by up to £11,250 for first-time buyers.
And two thirds of homes (66%) in England are now exempt from stamp duty for first-time buyers. The current thresholds are due to remain in place until the end of March 2025.
What are the stamp duty rates now?
| Stamp duty tax bands from 23 Sept 2022 | Normal rate | First-time buyers | Rate |
|---|---|---|---|
| Up to £250,000 | 0% | Up to £425,000 | 0% |
| £250,001 to £925,000 | 5% | £425,001 to £625,000 | 5% |
| £925,001 to £1.5 million | 10% | Homes priced above £625,000 | Normal rates apply |
| Over £1.5 million | 12% | ||
Use our calculator to work out how much stamp duty you might pay
What were the stamp duty rates in England and Northern Ireland before today?
No stamp duty was payable on homes, or the portion of a home, priced at or below £125,000. First-time buyers didn’t pay any stamp duty tax on homes priced below £300,000.
| Stamp duty tax bands before 23 Sept 2022 | Normal rate | First-time buyers | Rate |
|---|---|---|---|
| Up to £125,000 | 0% | The portion up to £300,000 | 0% |
| £125,001 to £250,000 | 2% | The portion over £300,000 up to £500,000 | 5% |
| £250,001 to £925,000 | 5% | Homes priced above £500,000 | Normal rates apply |
| £925,001 to £1.5 million | 10% | ||
| Above £1.5 million | 12% | ||
How much is stamp duty in Wales?
In Wales, Stamp Duty is called Land Transaction Tax (LTT). First-time buyers pay the same amount as other home-movers.
On the 27th September, the Welsh Government announced the threshold is being increased from £180,000 to £225,000, with the change coming into force on 10 October 2022.
There will also be an increase in the rate of LTT for homes that cost more than £345,000. Anyone buying a home costing less than £345,000 will see a reduction in the tax they pay, up to a maximum of £1,575. The LTT payable on homes worth more than £345,000 will see an increase – up to £550 – which represents around 15% of property transactions in Wales.
All other elements of Land Transaction Tax will remain unchanged, with no tax reductions provided to buyers of second homes.
From 10 October, LTT will be charged at the rates below:
| Purchase price | LTT rate |
|---|---|
| The portion up to and including £225,000 | 0% |
| The portion over £225,000 up to and including £400,000 | 6% |
| The portion over £400,000 up to and including £750,000 | 7.5% |
| The portion over £750,000 up to and including £1.5m | 10% |
| The portion over £1.5m | 12% |
And in Scotland?
In 2015, Land and Buildings Transaction Tax (LBTT) replaced Stamp Duty Land Tax in Scotland and is charged at the following rates:
| Purchase price | LBTT rate |
|---|---|
| Up to £145,000 | 0% |
| The portion over £145,000 up to £250,000 | 2% |
| The portion over £250,000 up to £325,000 | 5% |
| The portion over £325,000 up to £750,000 | 10% |
| Over £750,000 | 12% |
What if you’re moving country?
If you’re currently living in Great Britain and are looking to move to another of the devolved nations of England, Wales, Scotland and Northern Ireland, the local stamp duty rates will apply when you’re buying your home.
READ MORE: How much are first-time buyer homes in your region?
The header image for this article is provided courtesy of Andrews Estate Agents, Bath
