UK Stamp Duty Cut: All you need to know about the biggest tax reductions since 1972

/ residential property

What is stamp duty?

Stamp Duty Land Tax is a levy on home and land purchases. It is a cost that buyers must pay if the transaction value exceeds a certain amount. This tax applies to both freehold and leasehold properties – whether you’re buying outright or with a mortgage.

When will the cuts come into effect?

The UK Chancellor of the Exchequer Kwasi Kwarteng announced in his mini budget statement on Friday 23rd September that the changes would become effective immediately. The Chancellor said the reduction aims to “support growth, increase confidence and help families aspiring to own their own home”.

What are the new rates?

The stamp duty cut comes in the form of increased threshold. The amount of stamp duty you pay therefore depends on how much the property costs. The Chancellor announced that the price at which stamp duty is paid was doubled from £125,000 to £250,000.

The new rates are:

  • 0%: £0 - £250,000 (£425,000 for first time buyers)

  • 5%: £250,000 - £925,000

  • 10%: £925,000 - £1,500,000

  • 12%: £1,500,000+

The chancellor added that discounted stamp duty for first-time buyers will now apply to properties costing up to £625,000 - up from £500,000.

Will stamp duty fall in Scotland and Wales too?

The reduction in stamp duty rate will apply to England and Northern Ireland only. The taxation rules on property sales in England and Northern Ireland are separate from those in Scotland and Wales. Those buying property in Wales need to pay tax calculated at the Welsh Land Tax rates.

How does the stamp duty cut affect ongoing transactions?

Any transaction that completed on September 23, and onwards, will have the benefit of these cuts, which are permanent. Unfortunately, if you completed on September 22 then you cannot reclaim any of the tax that you have paid.

When and how do you pay stamp duty?

You have 14 days from the date of completion. If it takes longer, you could be liable for a fine, or be charged interest on the duty you owe. Methods of payment include paying directly online, or by cheque or cash in many banks. It is also common for buyers to pay via their solicitors. Either way, you’re responsible for making sure it is all submitted on time.

How will stamp duty affect mortgage costs?

Along with Bank of England’s half-point interest rate hike, stamp duty reduction could push mortgage costs up too. Some financial experts warn home buyers could end up paying higher monthly debt bills.

If you require any assistance with a property matter, please get in touch with our Property Team on 01494 521301.