How has stamp duty changed over time?
On September 23rd, Chancellor Kwasi Kwarteng delivered a "mini-budget" in which he offered permanent stamp duty discounts for certain homebuyers. In England and Northern Ireland, buyers must pay stamp duty if the purchase price of their home or land is more than the applicable threshold.
Previously, a stamp duty tax was due on the difference between the home price of a home or its share and £250,000. As of today's announcement, stamp duty is exempt on transactions with a purchase price of less than £250,000.
Previously, only 7% of homes in England were exempt from stamp duty, but now that it's at £125,000, a third of all available homes are.
Before the mini-budget was announced, the first £300,000 of a home purchase was not subject to stamp duty. In light of recent developments, this sum has increased to £425,000. Even if the purchase price of the home you're looking to purchase is over £625,000, you'll only have to pay 5% stamp duty on the amount that exceeds £425,000. When compared to the former ceiling of £500,000, this is an increase of £125,000.
All homebuyers and sellers can save up to £2,500 in stamp duty according to the new rules, while first-time buyers can save up to £11,250.
In addition, first-time buyers in England no longer have to pay stamp duty on almost two-thirds (66%) of homes.
What are the current stamp duty rates?
| Stamp duty tax bands from 23 Sept 2022 | Normal rate | First-time buyers | Rate |
|---|---|---|---|
| Up to £250,000 | 0% | Up to £425,000 | 0% |
| £250,001 to £925,000 | 5% | £425,001 to £625,000 | 5% |
| £925,001 to £1.5 million | 10% | Homes priced above £625,000 | Normal rates apply |
| Over £1.5 million | 12% |
When compared to today, what were the rates of stamp duty in England and Northern Ireland?
In the home, properties or portions of properties valued at less than £125,000 were exempt from paying stamp duty. Properties priced at less than £300,000 were exempt from stamp duty for first-time buyers.
| Stamp duty tax bands before 23 Sept 2022 | Stamp duty tax bands before 23 Sept 2022 | First-time buyers | Rate |
|---|---|---|---|
| Up to £125,000 | 0% | The portion up to £300,000 | 0% |
| £125,001 to £250,000 | 2% | The portion over £300,000 up to £500,000 | 5% |
| £250,001 to £925,000 | 5% | Homes priced above £500,000 | Normal rates apply |
| £925,001 to £1.5 million | 10% | ||
| Above £1.5 million | 12% |
Just how much does Wales impose as stamp duty?
Land Transaction Tax is the name for Stamp Duty in Wales (LTT). Everyone, including those buying a home for the first time, pays the same price.
Homebuyers who spend less than £180,000 on a property are exempt from LTT at the present time. The Welsh Government announced on September 27 that the threshold would be raised from £180,000 to £225,000 beginning October 10, 2022.
Property prices over £345,000 will also see an increase in LTT rates. Taxes will be lowered by up to £1,575 for those who purchase a home for less than £345,000 (the maximum decrease). For homes valued more than £345,000—roughly 15% of all property deals in Wales—the LTT due will increase, from £345 to £550.
Second-home buyers will not receive any tax breaks, and all other aspects of Land Transaction Tax will remain the same.
LTT is currently charged at the rates below:
| Purchase price | Land Transaction Tax rate |
|---|---|
| The portion up to and including £180,000 | 0% |
| The portion over £180,000 up to and including £250,000 | 3.5% |
| The portion over £250,000 up to and including £400,000 | 5% |
| The portion over £400,000 up to and including £750,000 | 7.5% |
| The portion over £750,000 up to and including £1.5m | 10% |
| The portion over £1.5m | 12% |
Furthermore, in Scotland?
Land and Buildings Transaction Tax (LBTT) replaced Stamp Duty Land Tax in Scotland in 2015, and the following are the current LBTT rates:
| Purchase price | LBTT rate |
|---|---|
| Up to £145,000 | 0% |
| The portion over £145,000 up to £250,000 | 2% |
| The portion over £250,000 up to £325,000 | 5% |
| The portion over £325,000 up to £750,000 | 10% |
| Over £750,000 | 12% |
