On 23 September, Kwasi Kwarteng implemented significant changes for Stamp Duty Land Tax (SDLT) thresholds, all of which have been retained by the new Chancellor, Jeremy Hunt.
Thresholds for first-time buyers have increased from £300,000 to £425,000 on property worth up to £625,000. While for everyone else, the threshold has doubled from £125,000 to £250,000.
What this means for you depends on whether you are a first-time buyer, a home-mover, or a second-home buyer or investor.
First-time buyers
The changes mean first-time buyers will only pay SDLT on homes purchased for more than £625,000. Previously, the cap stood at £500,000.
At the same time, the threshold for first-time buyers to pay SDLT has increased from £300,000 to £425,000.
According to HM Treasury, a first-time buyer purchasing a home for £400,000 will now pay £5,000 in SDLT, rather than the £10,000 they would have been liable for under the previous regime.
Meanwhile, a first-time buyer purchasing a property for £600,000 will now pay £8,750 in SDLT rather than the previous £17,500.
Crucially, where homes are jointly purchased, both parties must be first-time buyers to qualify for relief.
Home movers
Home movers do not benefit from the same levels of relief as first-time buyers but will see savings of up to £2,500.
A home mover buying a property valued at £200,000 will now pay no SDLT but would previously have paid £1,500.
Buying a property at £400,000 would see the SDLT charge fall from £10,000 to £7,500 – a saving of £2,500.
Buyers of properties worth £600,000 will benefit from the same saving, with the SDLT charge falling from £20,000 to £17,500.
Second-home buyers, landlords, and investors
Although landlords and investors benefit similarly to home movers, they will continue to pay an additional 3% on the total property purchase price if they own another home.
There is an additional 2% surcharge if the individual is considered an overseas investor.
Although rising interest rates have added additional costs to mortgages, the changes to SDLT still offer an opportunity for many individuals to acquire new properties at a lower cost.
Do you require professional advice after the former Chancellor’s cut to Stamp Duty Land Tax? Contact Pauline Hudd today.
Link: Stamp Duty Land Tax
