Chancellor Kwasi Kwarteng has unveiled a package of tax cuts today, including cutting stamp duty land tax (SDLT) rates in England and Northern Ireland for some buyers.
What Are The New Rates of Stamp Duty?
The amount of stamp duty you are required to pay depends on the cost of the property you are purchasing. These new rates come into effect immediately and are a permanent change (23/09/2022).
SDLT applies when you buy a freehold property, buy a new or existing leasehold property, buy a shared ownership property or are transferring land or property in exchange for payment.
Before 23rd September 2022, the price at which stamp duty was paid stood at £125,000. This has now doubled to £250,000. This means if you purchase a property under £250,000, stamp duty will not be payable.
The rates are now as follows:
|Property Price||SDLT Rate|
|£0-£250,000 (£425,000 for first time buyers)||0%|
|£250,001 – £925,000||5%|
|£925,001 – £1,500,000||10%|
There will also be a discounted SDLT for new time buyers for properties costing up to £625,000, up from £500,000.
It is important to remember that you only pay SDLT on the portion of the property cost within each threshold.
These cuts to SDLT will also mean purchasing your second home will cost less. For example:
Before 23/09/22 – SDLT payable on a property value of £300,000 would cost £5,000.
This is because the first £125,000 of the property price would be subject to 2% SDLT equalling £2,500, and the last £50,000 would be subject to 5% SLDT equalling another £2,500.
After 23/09/22 – SDLT payable on a property value of £300,000 would cost £2,500.
This is because the property price is now exempt from SDLT up to £250,000, meaning SDLT is only payable on the last £50,000 of the property equalling £2,500.
When Do I Have to Pay SDLT?
In England and Northern Ireland, you have 14 days to pay SDLT from the date of completion.
In Scotland and Wales, you have 30 days to pay.
How Do I Pay SDLT?
If you have purchased a new home, you will often pay SDLT via your solicitors. However, you can also pay online, by cheque, or even by cash in many banks. Please note however that if you are buying with the aid of a mortgage, SDLT must be paid via your solicitor only.
You can also add stamp duty to mortgage loans (when applying for the mortgage), but you may end up paying significantly more in interest payments.
If you would like to discuss any points in this article further or are looking for legal advice relating to residential conveyancing, please contact Spire Solicitors LLP on 01603 677077.