When buying a residential property in England or Northern Ireland, you will usually have to pay Stamp Duty Land Tax (SDLT).
In September’s mini-budget, the Chancellor announced a range of changes to Stamp Duty Land Tax to promote the government’s commitment to the housing market and support home ownership and growth. Kwarteng’s changes to SDLT will have a significant impact on the amount of SDLT paid, especially for first-time buyers.
What has changed?Prior to the changes introduced in the budget, Stamp Duty Land Tax was not payable on the first £125,000 of a property purchase, however following the Chancellors announcement, this threshold was doubled to £250,000. So for someone purchasing a house for £250,000 this would equate to a tax saving of £2,500.
Previously first-time buyers would not pay any Stamp Duty Land Tax on the first £300,000 of their property purchase as long as the total purchase price was less than £500,000. The threshold at which first-time buyers begin to pay SDLT was increased to £425,000 and the first-time buyers relief is now available to any first-time buyer purchasing a house of up to £625,000. To put this in context, a first-time buyer who purchases a house for £625,000 will now pay £11,250 less in Stamp Duty Land Tax.
Why have the government made these changes?The government is estimating that the reductions in SDLT will exempt 200,000 homebuyers from having to pay SDLT, including 60,000 first-time buyers. Individuals and their families purchasing residential properties are expected to be positively impacted by this cut. The aim being that it will be easier for some families and individuals to purchase their own home.
When will this change come into effect?The changes announced were immediately effective, so applies to any property purchase that completes on or after 23 September 2022. It is not expected that this will be a temporary measure.
Who will benefit from the SDLT cut? It is worth noting that Stamp Duty Land Tax is devolved in Wales and Scotland, so these changes will not immediately impact property purchasers in those countries. It will be left to the devolved administrations to make changes to Land Transaction Tax (LTT) in Wales and Land & Buildings Transaction Tax (LBTT) in Scotland.
Some have voiced concerns that the changes introduced by the Chancellor will be a catalyst for further house price increases, however, the rising interest rates are likely to reduce the risk of house prices spiralling upwards.
Do you need any asisstance?
Stamp Duty is a complex area of taxation. Get in touch with the team at Oldfield via firstname.lastname@example.org or call 02476673160 and we will be happy to advise on the best solutions you can take advantage of, based on your own circumstances and business structure.
Please note: This article is provided for information only and was correct as at time of writing (07/10/22). Any lists and details provided above are not exhaustive and are not intended to be full and complete guidance. No action should be taken without consulting detailed legislation or seeking independent professional advice. Therefore no responsibility for loss occasioned by any person acting or refraining from action as a result of the material contained in this article can be accepted.