What is Stamp Duty Land Tax?

Stamp Duty Land Tax (SDLT) is the tax paid when you purchase a property. The amount you pay differs depending on the type of property, when you purchased it, how much you paid for it and whether you or your spouse/partner/co-buyer already owned a property.

What are the SDLT updates?

On 23rd September 2022, Chancellor Kwasi Kwarteng announced measures to cut stamp duty in an attempt to grow the economy and also support first-time buyers purchasing a home. The announcement is effective immediately.

The changes for residential property purchases are as follows:

  • Nil-rate band doubled for all buyers, up to £250,000.
  • The level that first-time buyers start paying stamp duty has been increased from £300,000 to £425,000.
  • The government is allowing first-time buyers to access relief when they buy a property for less than £625,000. The limit was previously £500,000.
  • Stamp duty bills will be reduced for all purchasers by up to £2500. First-time buyers may now access up to £8750 in relief.

Stamp Duty Land Tax rates 

The current SDLT rates and calculations are as follows:

FIRST TIME BUYER – New SDLT Rate after 23rd September 2022
Property or lease premium or transfer value SDLT rate Example
£0 – £425,000 0% purchase price = £500,000

 

SDLT= £425,000 x 0% + £75,000 x 5% = £3,750
£425,001 – £625,000 5%

 

SINGLE PROPERTY (Inc. Replacing your main residence) – New SDLT rate after 23rd September 2022
Property or lease premium or transfer value SDLT rate Example
£0 – £250,000 0% purchase price = £500,000

 

SDLT = £250,000 x 0% + £250,000 x 5% = £12,500
£250,000 – £925,000 5%
£925,000 – £1,500,000 10%
Over £1,500,000 12%

 

ADDITIONAL PROPERTIES – New SDLT rate after 23rd September 2022
Property or lease premium or transfer value SDLT rate

(3% additional rate)

 Example
£0 – £250,000 3% purchase price = £500,000

 

SDLT = £250,000 x 3% + £250,000 x 8% = £27,500

Please note that there is an additional 2% surcharge for overseas buyers that applies to purchases completing on or after 1 April 2021.

How will the changes impact the economy?

The update aims to bring job and social mobility since it should mean that more people are able to buy a home, particularly first-time buyers. The measures should assist in boosting the property market.

Although the update is set to boost the economy, there is the fear that rising interest rates might possibly outweigh the cuts.

Residential Property Solicitor Blackheath

Please speak to our team of experienced conveyancing solicitors at Beverley Morris & Co. if you have any questions regarding buying a property.

Please call 020 8852 4433, email enquiries@beverleymorris.co.uk or fill in this contact form.