In an effort to stimulate economic growth in the UK, Prime Minister Liz Truss passed an initiative to reduce stamp duty tax as a part of Chancellor of the Exchequer Kwasi Kwarteng’s mini-budget announcement. These stamp duty tax cuts took effect immediately.
Read on to find out what this means for home buyers in the UK and how Rickman Properties can help.
What is stamp duty land tax?
Stamp duty land tax, or SDLT, is simply a tax on increasing portions of property price when purchasing residential property, like a house or flat, in Northern Ireland or England. SDLT is paid when buying freehold and leasehold properties and only applies to properties over a certain value. The amount a buyer will owe depends on when the property was purchased and the value of the home at the time of purchase. Some cases where this tax might not be payable include cases in which the property is transferred in court due to separation or divorce, or if the home is a gift (and no outstanding mortgage is owed).
The UK government stated that it is committed to fostering an economy structured around high growth and low tax. This allows people to keep more of the money they earn while encouraging business investments as a result. In order to create an economic environment to help people achieve these goals, the government has announced it is cutting Stamp Duty Land Tax for those purchasing a residential property by doubling the threshold at which people owe from £125,000 to £250,000. Additionally, first-time home buyers are not required to pay SDLT up to £425,000. This threshold for first-time buyers has been increased from £300,000 to £425,000 as of 23 September 2022.
New SDLT Rates and Details
Here are the key points of this new reform. Overall, the price at which stamp duty is paid doubled from £125,000 to £250,000. Note that buyers have 14 days to pay stamp duty from the date of completion in England and Northern Ireland.
The new rates are:
- 0%: £0 – £250,000 (£425,000 for first-time buyers)
- 5%: £250,000 – £925,000
- 10%: £925,000 – £1,500,000
- 12%: £1,500,000+
What does this stamp duty cut mean for you and how can an estate agent help?
In cases such as this, it’s important to be prepared for how these changes might impact your household and future investments in real estate. The government has provided tools, such as the SDLT Calculator to help prospective buyers prepare. These new measures will reduce stamp duty bills for movers up to £2,500 and first-time buyers are now able to access up to £11,250. Chancellor Kwasi Kwarteng has confirmed a permanent stamp duty cut in the mini-Budget, so the impact is expected to be felt long term.
In addition, a good estate agent is the perfect partner to ensure that all requirements are met before you move into a new home. Rickman Properties estate agents in London ensure that they are always up to date with various developments in the world of real estate. As a result, our agents are experts in navigating these changes in current legislation as they are well versed in interpreting the implications of market changes.
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