The government has cut stamp duty tax in England and Northern Ireland for some buyers in the recent budget and have confirmed it will be staying.
What is Stamp Duty?
Stamp duty is a tax paid when you buy a property – the amount of stamp duty you pay depends on the cost of the property.
What changes have been made to Stamp Duty?
In the recent budget, the price at which stamp duty is paid was doubled from £125,000 to £250,000, so the rates are now…
- 0% for proportion between £0 – £250,000 (£425,000 for first time buyers)
- 5% on the proportion between £250,000 – £925,000
- 10% on the proportion between £925,000 – £1,500,000
- 12% on the proportion above £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.
How much Stamp Duty will I pay?
Buyers of homes that cost less than £250,000 now won’t pay any stamp duty and first-time buyers can spend £450,000 before paying stamp duty.
If you’re purchasing a property at £625,000 you’ll pay nearly £19,000, a property at £1m will mean stamp duty will cost just over £41,000.
You can use the government’s Stamp Duty Land Tax (SDLT) Calculator to find out how much you have to pay.
When and how do I have to pay Stamp Duty?
You have 14 days to pay stamp duty from the date of completion in England and Northern Ireland, in Scotland and Wales you have 30 days from the point of purchase – if it takes you longer, you could face a fine, or be charged interest on the duty you owe.
House buyers often pay via their solicitors, but you can also pay directly online, or by cheque or cash in many banks. It is possible to add stamp duty to mortgage loans and increase your debt to cover the cost of the tax, but you could end up paying significantly more in interest payments.
How does Stamp Duty have an effect on the housing market?
During the pandemic, the government announced a stamp duty holiday to help home buyers whose finances were affected by Covid. It meant no stamp duty was payable on the first £250,000 of the property.
This has been widely thought to have stimulated the housing market and estate agents reported a surge of interest. UK house prices were said to have increased by 15.5% over the year to July 2022, up from 7.8% in June 2022.
To discuss the sale of your property, get in touch with our office and we can help you to understand your options when looking at selling your house or purchasing a new home.