Stamp Duty Reduction – What does it mean?

In the mini budget released by the Government last week (23^rd September), it was announced that there would be a Stamp Duty reduction.  In short, the price at which you do not have to pay Stamp Duty on the purchase of your home has now doubled from £125,000 to £250,000, but, if you’re a first-time buyer the price is now £425,000.

So what is Stamp Duty?

Stamp Duty Land Tax (SDLT) is a payment any person buying a property or land over a certain price in England and Northern Ireland must pay to HM Revenue and Customs (HMRC), the tax is different for Scotland and Wales.

If you are buying a residential property there are different rates of SDLT if:

• You’re a first-time buyer
• You already own a property and you’re buying an additional property

SDLT applies when a property purchase price reaches the threshold.  Therefore if you purchase a property for less than the threshold there is no SDLT to pay.

The SDLT is payable within 14 days of completion of the purchase of your property.  Your solicitor usually files your return and pays the tax on your behalf on the day of completion and adds the amount to their fees.

Stamp Duty Today

As previously mentioned, the Stamp Duty threshold has been raised from £125,000 to £250,000, which means you will pay no SDLT on properties up to £250,000 which represents a saving of £2,500 on a property priced at £250,000.

For first time buyers, the threshold has been raised higher, from £300,000 to £425,000. Over £425,000 and up to £625,000 there will be a 5% charge.

To calculate stamp duty on your new home click here