Stamp Duty – What You Need to Know

In the short blog post below, we wanted to give a quick summary of some frequently asked questions in relation to stamp duty, particularly in light of the recent changes to Stamp Duty thresholds, as set out in the mini budget on 23rd September 2022.

What is Stamp Duty?

Stamp Duty Land Tax (SDLT) is a levy paid when you purchase a freehold, leasehold or shared ownership residential property over a certain price (currently £250,000) in England and Northern Ireland (separate taxes apply in Wales and Scotland).

Stamp Duty is a progressive tax, meaning that Stamp duty rates are payable, only on the portion of a property price that falls within each band. Further detail on this is shown below.

It is important to note that SDLT rates and thresholds differ for non-residential property or mixed use land.

When is it payable?

Stamp Duty is payable to HMRC, within 14 days of completing on your property, or land purchase. Your Solicitor or legal advisor typically takes care of this for you and ensures you meet the deadline.  Stamp Duty can also be calculated as part of your overall mortgage, but this results in interest being paid on it, for the duration of your mortgage term. 

What are the current rates of Stamp Duty?

The current rates (as of 23rd September 2022) are as follows –

Up to £250,0000%
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%

In the mini budget, which was announced on 23rd September 2022, The Chancellor, Kwasi Kwarteng, confirmed a permanent stamp duty cut, with no tax to be paid on properties up to the value of £250,000 – an increase from the former nil rate of £125,000.  

Under the new system, the first £250,000 of a property’s value will be exempt, and buyers will pay 5% of the value of the home from £250,001. The portion between £925,001 and £1.5m will continue to be taxed at 10%, and any property worth more than that will be subject to stamp duty rates of 12%.

The Chancellor also increased the SDLT threshold for first-time buyers from £300,000 to £425,000 in a move to increase home ownership. Under the plans, the first-time buyer relief will be applicable to properties worth up to £625,000, compared with the former level of £500,000.

A stamp duty calculator to enable you to assess the amount of Stamp Duty you are likely to incur for a prospective property is linked below.

Buy-to-let and second homes stamp duty

As of April 2016, purchasers of additional dwellings, such as second home or buy-to-let properties have had to pay an additional 3% on each stamp duty band.  This is still the case, and an additional 3% should be applied to the rates set out in the table above.

Buy-to-let and second home stamp duty tax bands

BracketsRateBuy-to-Let/Second Home Rate
(April 2016)
£0 - £250,0000%3%
£250,001 - £925,0005%8%
£925,001 - £1.5m10%13%
over £1.5m12%15%

Source: HMRC

What are the rates for non-UK residents?

On the 1 April 2021, a 2% stamp duty surcharge for overseas buyers purchasing residential property in England and Northern Ireland was introduced.

The surcharge applies to non-resident buyers regardless of the type of buyer (e.g. company or individual) subject to a few exceptions for specific collective investment vehicles such as REITs.

The surcharge is levied in addition to the 3% buy-to-let/second homes charge, the flat 15% stamp duty rate on purchases of dwellings worth more than £500,000 by companies acting as “envelopes” and the existing stamp duty rates for home buyers.

Who are the main beneficiaries of the Stamp Duty Changes?

Purchasers across the board, will benefit from Stamp Duty savings of up to £2,500 with immediate effect. First time buyers have been the main beneficiaries of the changes, enabling them to access up to £8,750 in relief.  The positive news in terms of reduced taxes for Stamp Duty is almost certainly going to be counterbalanced by the likelihood of increased interest rates over the coming months.

*Please note that the commentary above is for general interest only and must not be relied on. It may not be up to date or complete, relates only to certain types of residential property in England or Northern Ireland and does not constitute advice. You will need to take specific advice from your property lawyers, accountants or other financial advisers on tax issues in specific situations.

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