Stamp duty explained

Stamp duty is one of the costs you need to consider when you purchase a new home. Depending on the value of the property you buy, it can be a sizeable cost to take into account.

Officially known as Stamp Duty Land Tax (SDLT) in England and Northern Ireland, the charge is a tax that’s paid to the government when you buy property. Some buyers and properties are exempt, while there are different rates that apply depending on the value of the home you buy.

Kwasi Kwarteng, Chancellor of the Exchequer, has announced the relaxation of Stamp Duty Land Tax rules which are likely to benefit thousands of home-movers over the coming months.

Chancellor Kwasi Kwarteng has moved to double the amount at which stamp duty kicks in for all home purchases, meaning the first £250,000 of a property’s price will be exempt from the levy compared to £125,000 now.

The Stamp Duty Land Tax bands, therefore, now stand as follows:

• £0 – £250,000.00 – NIL RATE
• £250,001.00 – £925,000 – 5%
• £925,001.00 – £1,500,000 – 10%
• Above £1,500,001 – 12%

According to the Government, this action will mean:

“a standard buyer in England will save £2,5000, meaning a typical family moving into a semi-detached property will save £2,500 on stamp duty and £1,150 on energy bills – and if they have a combined income of £50,000 around an additional £560 on tax. This is around £4,200 in total”.

Help for first-time buyers was equally generous, with the threshold at which stamp duty begins rising from £300,000 to £425,000, while the maximum value of a property on which first-time buyers can claim relief increased to £625,000 from £500,000.

Additionally, the Government will introduce further financial support for first-time buyers, who meet the HM Revenue & Customs criteria, which include:

• The purchase must be a residential property
• The purchase price must not exceed £625,000.00 an increase of £125,000.00 on the previous relief
• The buyer must intend to occupy the property as their only or main residence
• The buyer must not have previously had, at any time, a major interest in a property anywhere in the world

First-time buyers that satisfy the above criteria will be eligible for relief from all Stamp Duty Land Tax payable on a purchase price of up to £425,000.00, this is an increase of £125,000.00.

Where first-time buyer purchases for over £425,000.00 they will pay a five percent Stamp Duty Land Tax on the proportion from £425,000.00 to the purchase price.