Government Announces Permanent Stamp Duty Cut
Mon 17 Oct 2022
Ian Woodhouse-Smith, Lettings Manager
What is stamp duty?
Stamp duty is the tax paid when buying a property or land in England and Northern Ireland. The tax only applies to properties over a certain value, and the amount of stamp duty you pay increases with the value of the property.
The new stamp duty threshold
In his mini-budget on 23 September, the new Chancellor announced a permanent reduction in stamp duty thresholds.
The threshold was previously £125,000 – it is now £250,000. This means that you won’t need to pay any stamp duty on properties up to the value of £250,000. If you buy a £500,000 property, for example, you’ll now pay £12,500 stamp duty rather than £15,000.
For first-time buyers, the threshold has increased from £300,000 to £425,000.
What are the new stamp duty rates?
The new rates are as follows:
- 0% on the first £250,000
- 5% on £250,000 - £925,000
- 10% on £925,000 - £1,500,000
- 12% on £1,500,000+
How do you pay stamp duty?
Most commonly, you’ll pay stamp duty via your solicitors. However, you can also pay online or by cheque.
You can also add stamp duty to your mortgage loan, but this can greatly increase your mortgage repayments.
After completion on your new property, you’ll have 14 days to pay your stamp duty.
If you fail to pay within two weeks, you might be fined or charged interest on the tax you owe.
What will the stamp duty cut do to the property market?
The impact this will have on the property market is unknown. The previous stamp duty holiday, introduced in July 2020, stimulated the market and caused a huge surge in demand.
With this cut in place permanently, however, there might be less of a rush to secure new homes. The cost-of-living crisis has also been slowing the market, with fewer people able or willing to make such a large, long-term financial investment.
If you want to capitalise on the new stamp duty reductions and purchase a home in the Alresford area, contact the Hellards team today.