Homebuyers make savings as stamp duty thresholds rise

For those homebuyers facing higher mortgages, changes to Stamp Duty Land Tax (SDLT), or stamp duty, announced in September’s mini-Budget will ease some of the pain.

For homebuyers, from 23 September the level at which people start paying stamp duty land tax was raised from £125,000 to £250,000.

For first-time buyers in England and Northern Ireland, they will not pay any stamp duty on properties up to £425,000 – the previous threshold was £300,000.

The maximum value of a property on which first-time buyers can claim relief also increased from £500,000 to £625,000.

The new SDLT rates when purchasing residential property are now:

                Property price                  SDLT rate

  • Up to £250,000                     0 per cent
  • £250,000 – £925,000            5 per cent
  • £925,000 – £1,500,000       10 per cent
  • Above £1,500,000                12 per cent

Where surcharges apply

For those who are purchasing a second property or further properties, an extra three per cent surcharge applies.

Anyone buying an additional residential property for £40,000 or m-ore has to pay the surcharge, whether it’s a holiday home or a buy-to-let.

The surcharge is added to each rate of SDLT and, therefore, increases for more expensive properties.

For example:

Property value                                                                                                            SDLT rate

  • Up to £250,000                                                                                              3 per cent
  • The next £675,000 (difference between £250,001 to £925,000)                  8 per cent
  • The next £575,000 (difference between £925,001 to £1.5 million)             13 per cent
  • The remaining amount (difference between £1.5 million)                           15 per cent

For landlords considering multi-property purchases, they can make SDLT savings by buying more lower priced properties with a lower stamp duty rate, rather than say a property above £1.5 million, where higher charges apply.

SDLT is a devolved issue for Scotland and Wales where separate rules apply.

Need help or advice with SDLT and other tax matters? Contact our team today.

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