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What are the Stamp Duty Changes in the Mini Budget 2022?

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The chancellor, Kwasi Kwarteng, has today announced some changes in his ‘mini-budget’ including a reduction in the rate of stamp duty for some purchases. What are the stamp duty changes that have been announced? They are as follows:

  • No stamp duty is payable on purchases under £250,000 (this was previously set at £125,000) and for the tranche of the purchase price under that level for purchases over that amount – there is a different rate for first time buyers**
  • The next £675,000 (i.e. for properties up to £925,000) is charged at 5%
  • The next £575,000 (i.e. the amount charged between £925,001 and £1.5m) is charged at 10%
  • Amounts over £1.5m are charged at 12%

This means essentially that he has removed the 2% tranche for the purchase value between £125,000 and £250,000, which decreases the amount of stamp duty that is payable on properties above £250,000 by £2,500 (250,000 – 125,000 * 0.02). The other tranches remain as they were before and that is the only change.

What are the stamp duty changes?

What are the stamp duty changes in the September 2022 mini-budget?

The average house price in the UK in June 2022 was £286,397 so this reduction in stamp duty will impact a large number of house purchases and will help a lot of buyers in the mid range of property purchases as well as at the higher end.

** The rate for first time buyers is different – prior to 23rd September 2022 there was a 0% rate up to £300,000 and then a 5% rate from £300,000 to £500,000. This has now changed to:

  • 0% up to the first £425,000
  • 5% on the next £200,000 – i.e. up to £625,000

Note that if you are a first time buyer and your property purchase price is greater than £625,000 (£500,000 previously) then you are subject to the general rates (i.e. you don’t get the first time buyers discount).

The changes take effect immediately – i.e. from 23rd September 2022. Anyone who completes on a property purchase from this date onwards will be subject to the new stamp duty rates.

Stamp duty rates for second properties reflect the rates for main properties but with an additional 3% added, so stamp duty for additional properties will also be affected.

These are also permanent changes rather than the temporary ones that occurred in the last few years.

 

2nd Property Stamp Duty Budget First Time Buyers Stamp Duty Changes

2018 Budget Stamp Duty Changes

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Philip Hammond delivering his 2018 Budget speech.

The Chancellor of the Exchequer, Philip Hammond, delivered his 2018 Budget yesterday (29th October) and introduced a couple of changes to Stamp Duty within that budget. One change was announced in the House of Commons during his budget speech and the other change was in the small print of the published budget documentation and so we will detail both here.

First Time Buyers

The first change was a major one and was building on the change announced in the last budget which gave first time buyers relief on paying stamp duty on certain purchases. Following this change, the Chancellor announced, 121,500 first time buyers had benefited from the change and the number of first time buyers has hit an 11 year high.

The addition to last years announcement is that first time buyers are now exempt from stamp duty when they purchase shared ownership properties up to the value of £500,000.

This change is also extended to property purchases within this remit that occurred since the last budget, so people who may already have bought properties that meet the criteria should be able to reclaim the stamp duty that they have paid.

Time Limits Extended

The other change was a minor amendment to extend the time limits for when additional stamp duty can be reclaimed after the sale of an old property.

The background on this is that previously, if you sold your main home within 3 years of buying a new one (main residence) then you could reclaim the extra 3% stamp duty paid. But you needed to claim this extra stamp duty within 3 months of selling the old home (or 12 months of buying the new one if that was later). This has now changed and you have 12 months after selling the old property to reclaim the extra stamp duty, giving a bit more breathing space for reclaiming the money.

You can find out further information on that change here.

Note: Apologies that this article was previously titled 2019 Budget Stamp Duty Changes and it has now been amended.

 

First Time Buyers Stamp Duty Questions

Can I Get First Time Buyer Stamp Duty Relief for a Buy to Let?

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In November 2017 the government bought in new rules regarding the stamp duty that is payable by first time buyers. In essence this meant that first time buyers who were buying a property worth under £300,000 would not have to pay any stamp duty as long as this was their first purchase.

As with all new legislation, there are always going to be questions about whether the rules apply to specific circumstances. In this case the question we are asking is ‘can you get first time buyer stamp duty relief on a buy-to-let purchase?’

When the announcement was made it was assumed that people would be buying their own home to live in and this was the aim of the legislation, to make it easier for first time buyers to get on the property ladder by reducing the amount of cash they had to find upfront.

Now that the details of the new rules have been released the clarification is in the Guidance Note and that specifies, in particular in the Third Condition:

“The third condition: The purchaser or purchasers are first time buyers intending to
occupy the dwelling as a main residence …

…All the purchasers must intend to occupy the dwelling as their only or main residence”

Therefore, as we understand it, if a first time buyer is buying a property to let (perhaps they may plan on moving into it at a later date and just want to get on the property ladder for now) they will not be eligible for the first time buyer stamp duty relief.

If the property is a first purchase however, the rules regarding the extra 3% stamp duty payable would not apply, so if they were buying a property worth under £300,000 then the extra stamp duty should not be payable, but standard stamp duty will be.

There are also other rules regarding the stamp duty relief which cover properties costing up to £500,000 which you can read about here.