The last few months have been a case of changes, u-turns, and more changes for the UK taxation system. One change that was put in by Kwasi Kwarteng in his short lived mini budget, was a change to stamp duty rates. This meant that rates were cut for a significant number of transactions (see link for details). However, in the Autumn Statement made yesterday by the new chancellor, Jeremy Hunt, a stamp duty cut end date was announced. Continue reading
Category Archives: Stamp Duty Changes
What are the Stamp Duty Changes in the Mini Budget 2022?
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 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.
Stamp Duty Holiday Extended
Rishi Sunak delivered his budget speech today in the Houses of Parliament
In the budget today (3rd March 2021), Rishi Sunak announced that the stamp duty holiday that was previously going to run until 31st March 2021, has been extended until 30th June 2021.
This extension was anticipated by the press and industry alike, as there has been a lot of action in the housing market to take advantage of the stamp duty holiday.
The stamp duty holiday had led to a busy period for conveyancers and estate agents and meant that it was likely that quite a few people would miss the deadline of the 31st March due to a bottleneck in the transactions.
Many people decided that this was an opportunity to move house and save some money – although it did seem that house prices rose because of the stamp duty holiday and so any saving may be difficult to gauge.
The stamp duty holiday, that was introduced in July last year, meant that there was a nil rate band for transactions up to £500,000 (above that amount normal rates applied for the excess above that level).
The Chancellor also announced that once the nil rate band for £500,000 was over in June, there would be a tapered approach to reverting to the previous amount of £125,000. This means that there will be a nil rate band up to £250,000 of the purchase price until the end of September (so for 3 months) and then on 1st October the rates would revert to normal, where only the first £125,000 of a purchase is tax free.
The £500,000 nil rate band potentially saves house buyers up to £15,000 which is the amount that would normally be charged on the purchase of a property worth £500,000. Obviously the saving is less if the purchase price is less than £500,000.
If you want to find out how much stamp duty that you will need to pay (with or without the stamp duty holiday) then you can check out our page with our stamp duty calculators.
Stamp Duty Suspension
Today (8th July 2020) the Chancellor of the Exchequer, Rishi Sunak has announced that there will be a temporary cut to stamp duty payments up to £500,000 until 31st March 2021, due to the effect of the Covid-19 pandemic on the housing market.
Mr Sunak said that the reasons behind implementing this reduction were that the housing market needed a push to restart. The number of property transactions dropped 50% in May, house prices have decreased and the sector needs a push to get the market moving. Continue reading
Rishi Sunak to Make Stamp Duty Annoucement
Stamp Duty could be reduced to 0% temporarily for some purchases.
It is expected that today, 8th July, Rishi Sunak will unveil a host of financial packages to help the recovery after the Covid-19 pandemic.
Among those changes is a possible suspension of stamp duty payments to try and encourage the housing market to recover.
This could mean that buyers of properties up to a certain value (possibly £500,000) may not need to pay any stamp duty when moving house – but we will update you here as soon as the full details are announced. Continue reading
Stamp Duty Charge for Overseas Buyers
The Chancellor of the Exchequer, Rishi Sunak, has just announced in his first budget speech on 11 March 2020, that there will be a surcharge on property purchases for overseas buyers buying property in the UK.
The surcharge was stated to be 2% on top of the standard rates, and this would take effect from April 2021. Continue reading
2019 Budget and Stamp Duty
Due to the ongoing political turmoil we are still waiting for an announcement on when the 2019 Budget will take place. Obviously with Brexit on the horizon I think we can assume that it is likely to be after 31st October when we will all have a better idea of the political and economic situation.
Update: It has been announced that the budget will be on 6th November 2019.
Extra Update: The 6th November budget has been cancelled!
There have been many people postulating on what changes to stamp duty may happen in the next budget – there is a lot of pressure on Boris Johnson and the current government to reverse the changes to stamp duty that were introduced by George Osborne in terms of the additional stamp duty payable on second properties.
There is also call for stamp duty to be abolished altogether on properties that cost less than £500,000.
Boris Johnson has not shown his hand on what he plans to do, if anything, as he is likely more ensconced in Brexit talks and other political matters at this time.
There has also been speculation that the onus of paying stamp duty would shift from buyers to sellers but Sajid Javid (the current Chancellor of the Exchequer) debunked that idea in a tweet in August (although we all know that things can change!)
More speculation about stamp duty this morning. To be clear, I never said to @thetimes I was planning to put it on sellers, and I wouldn’t support that. I know from @mhclg that we need bold measures on housing – but this isn’t one of them. https://t.co/9OVk3XiqMd
— Sajid Javid (@sajidjavid) August 18, 2019
So there are plenty of options that could be included in the budget and it could be argued that something needs to be done to lift the housing market, but we could also argue that the market is flat due to the uncertainty over Brexit and once that is finalised, perhaps the market will pick up again.
House buyers and sellers are quite possibly waiting for Brexit to be delivered in order to think about moving (which may also be affected by job uncertainty) so we will likely have to wait until November at least for some clarification.
Consultation Open for New 1% Surcharge for Overseas Buyers
The government announced in the 2018 Budget that they were proposing a new surcharge on UK property purchases of an extra 1% of the purchase price where the buyer (or one of the buyers) is not a UK resident. The consultation process for that proposal has begun and will end on 6th May 2019.
The proposal states:
The government is committed to helping more people into home ownership but there is evidence that purchases of property by non-UK residents is pushing up house prices for UK residents. The government will therefore consult on a Stamp Duty Land Tax (SDLT) surcharge on non-UK residents purchasing residential properties in England and Northern Ireland. The non-UK resident surcharge will apply to purchases of residential property made by non-UK resident individuals and certain non-natural persons. The surcharge will apply to freehold and leasehold purchases of residential property and will be at a rate of 1% on top of all existing SDLT rates, including the rates applicable to the rental element of leasehold property.
The government is proposing to treat individuals as non-UK resident for the purposes of the surcharge if they spent fewer than 183 days in the UK in the 12 months ending with the date the transaction occurs.
However, if the purchaser then becomes resident after the transaction date (i.e. spends more than 183 days in the UK in the 12 months afterwards) then they will be able to reclaim the surcharged SDLT. This will help anyone who may be relocating to the UK after a period abroad, for example and also ensures that the 1% surcharge does not get targeted on people who are genuinely wishing to make a home in the UK.
The extra 1% stamp duty will be on top of any other amounts that apply, including the increased amount payable when buying a second (or further) property.
Once the consultation process is over, the legislation will be introduced in a future Finance Bill.
You can find the consultation document here.
2018 Budget Stamp Duty Changes
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.
Abolition of Stamp Duty for First Time Buyers
Philip Hammond announced that first time buyers would be exempt from Stamp Duty in his Budget today.
In his much anticipated Budget today, the Chancellor Philip Hammond has announced that there will be an abolition of Stamp Duty for First Time Buyers (FTBs) up to the purchase price value of £300,000.
This announcement had been anticipated by the property community and had been encouraged to help the FTBs who were finding it harder and harder to purchase their own homes.
In addition, any First Time Buyers who are buying in higher cost areas will get relief on the first £300,000 of a purchase price of up to £500,000.
The finer details of the new rules will need to be checked, including whether both parties in a joint purchase need to be FTBS (which we believe is likely to be the case) and we will update here with any further information that we have.
The changes come into effect from today, so anyone who completes on a property from today onwards, and who has not owned a property before, will likely benefit from this change.
For a purchase price of £300,000 this would save £5,000 that would otherwise need to be found on purchasing the property. The problem with Stamp Duty is that it needs to be paid in cash so it is money that needs to be saved in addition to a deposit and any other costs that are required when moving. Lifting this charge may mean that FTBs are able to purchase their property sooner without having to save this additional amount.
For those who buy a property in a high cost area worth £500,000 and who are eligible for the £300,000 relief, they will still need to pay £10,000 in Stamp Duty but will not need to pay the first £5,000. (Clarification may be needed on how the exemption works in this situation).
According to the Chancellor this change is
A stamp duty cut for 95% of all first-time buyers who pay stamp duty.
And no stamp duty at all for 80% of first time buyers from today.
This is good news for First Time Buyers and we will wait to see what kind of effect this has on the housing market.