Amongst the raft of other tax cuts announced in Mr Kwarteng’s “Mini” Budget, the Chancellor announced cuts to Stamp Duty Land Tax (SDLT) in the hope that it would boost house sales and “enable up to 29,000 more people to move home each year”. The Government estimated that the changes would take an additional 200,000 out of paying SDLT altogether.
However, with the economic turmoil following the Mini-Budget leading to some mortgage providers withdrawing products and the expectation that interest rates will soar, there are likely to be few home-owners feeling better off and whether people will still have the appetite to move remains to be seen.
The announced SDLT changes have been summarised below:
Residential nil rate Threshold
The Residential nil rate threshold has been increased from £125,000 to £250,000. This is a tax saving of up to £2,500 depending on the value of the property. The new SDLT rates for residential property purchases are as follows:
| Relevant consideration | Percentage |
| Up to £250,000 | Nil |
| The next £675,000 (the portion from £250,001 to £925,000) | 5% |
| The next £575,000 (the portion from £925,001 to £1.5 million) | 10% |
| The remaining amount (the portion above £1.5 million) | 12% |
It is worth noting that the additional 3% charge for purchases of second homes introduced on 1 April 2016 and the 2% charge applicable to non-residents still apply on top of the rates listed above.
Additional relief for first time buyers
First time buyers previously did not pay any stamp duty on the first £300,000 of a residential property purchase to assist with the costs of getting on the property ladder. This relief was available where the amount paid for the property was £500,000 or less.
The Chancellor announced that the threshold at which no SDLT is payable has been increased from £300,000 to £425,000. Given the current boom in house prices, the relief has been extended to cover homes worth £625,000 or less.
SDLT has become a complicated tax over the last few years and these new changes will only add to this complexity. If you require any advice on what SDLT will be payable on your next purchase, please get in touch with your BHP contact.
