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Mini-Budget: Government Announces Stamp Duty Cut

Recent changes to stamp duty could make it easier for you to buy your next home. Check out the detail and find out how it affects you.

Sep 23, 2022

Mini-Budget: Government Announces Stamp Duty Cut

Yesterday, the government delivered a “mini-budget” announcing a raft of measures aiming to tackle the economic challenges the UK is facing.

Among the measures announced were significant – and immediate – changes to Stamp Duty Land Tax (SDLT) in England and Northern Ireland.

If you’re new to the property-buying game, stamp duty is a tax you pay when you buy a house. It’s organised in bands where the percentage of tax you pay increases according to the price of the property you’re buying.

According to the government announcement, the changes mean that around 200,000 people ‘will be taken out of paying Stamp Duty altogether’. Let’s have a closer look at what this means for you.

So… what’s changed?

As of Friday 23rd September, a property has to cost £250,000 before stamp duty kicks in (up from £125,000 previously). This means that if you’re buying a property that costs less than £250,000, you won’t need to pay any stamp duty at all. For the next £675,000, the rate is 5%. Let’s look at an example:

Let’s say you buy a house in October 2022 for £295,000. The Stamp Duty Land Tax you owe will be calculated as follows:

  • 0% on the first £250,000 = £0
  • 5% on the final £45,000 = £2,250
  • Total SDLT = £2,250

Is there any help for first-time buyers?

Yes, first-time buyers now won’t pay any stamp duty on the first £450,000 of their property purchase (up from £300,000). In addition, first-time buyers will now get a tax discount on property purchases up to £625,000 (up from £500,000).

All in all, these changes should make things easier for first-time buyers by reducing how much capital they need to hand over at the point of buying their first home. However, the challenges of saving for a deposit and tougher mortgage requirements still mean that many people will be struggling to make their first move into the property ladder.

When do the changes kick in?

The changes came into effect on Friday 23rd September. Unlike the temporary stamp duty holiday which ran through much of 2021, these changes to stamp duty are permanent.

What if I’m buying a home in Scotland or Wales? 

The changes announced only apply to properties in England and Northern Ireland. Scotland and Wales have their own versions of stamp duty tax: the Land and Buildings Transaction Tax (LBTT) in Scotland and Land Transaction Tax (LTT) in Wales. You can find more information about how much tax you’ll need to pay when buying a property in any part of the United Kingdom on the government website. However, bear in mind that their calculator hasn’t been updated to reflect the new changes as yet.

 

Looking for more information and help on the different costs associated with a property purchase? Check out our guide.