Stamp Duty Land Tax threshold increased

What is Stamp Duty Land Tax?

You must pay (SDLT) if you buy a property or land over a certain price in England and Northern Ireland.

You pay the tax when you:

• buy a freehold property
• buy a new or existing leasehold
• buy a property through a shared ownership scheme
• are transferred land or property in exchange for payment, for example you take on a mortgage or buy a share in a house

Thresholds

The threshold is where SDLT starts to apply. If you buy a property for less than the threshold, there’s no SDLT to pay.

The current SDLT thresholds are:

• £250,000 for residential properties
• £425,000 for first-time buyers buying a residential property worth £625,000 or less
• £150,000 for non-residential land and properties

How and when to pay

Send an SDLT return to HMRC and pay the tax within 14 days of completion.

If you have a solicitor, agent or conveyancer, they’ll usually file your return and pay the tax on your behalf on the day of completion. They’ll then add the tax to their fees.

If they do not do this for you, you can file a return and pay the tax yourself.

What are the new changes to Stamp Duty Land Tax?

Chancellors always like to pull rabbits out of the hat and make surprise announcements at the end of their Budget speech.

Although rumoured in the run up to this mini-budget, the SDLT announcement was still a surprise as house prices have been steadily rising. Increases in mortgage rates are likely to slow the market so the SDLT announcements are designed to stave off a housing slump. Moving house has a multiplier effect on the economy as people tend to spend money decorating and furnishing their new home, with estimates suggesting that doing so drives additional spending worth about 5% of the house value.

It is thus crucial to ensure medium-term confidence in the property market and maintain the growing momentum as the UK economy recovers. The Government has therefore cut SDLT for home buyers across England and Northern Ireland.

For residential property transactions completed on or after 23 September 2022;

• The Nil Rate Band (NRB) has been increased from £125,000 to £250,000.
• The NRB for first-time buyers has been increased from £300,000 to £425,000. This applies where first-time buyers purchase a property costing less than £625,000 (previously £500,000).

Different taxation rules apply to property transactions in Scotland and Wales and no changes have been announced in this regard.

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