Stamp Duty - Here’s What Has Changed for Buyers in 2022
This September, Chancellor Kwasi Kwarteng announced a stamp duty change for buyers in England and Northern Ireland. In this post, we’ll look at what’s changed and what those changes mean if you’re looking to buy a property in the near future.
A Quick Introduction to Stamp Duty
Before we jump into the details, let’s quickly cover the basics, including what stamp duty is. Stamp duty is a tax, and it’s paid by buyers when they purchase a property or land above a certain price threshold in the UK.
Previously, buyers in England and Northern Ireland were required to pay stamp duty on land or property purchases above £125,000 (this is known as the nil-rate tax threshold). The amount of stamp duty buyers paid varied depending on the total value of the sale and whether they were first-time buyers, overseas buyers, or buying to let.
In England and Northern Ireland, buyers have 14 days from the date of completion to pay their stamp duty.
Changes to Stamp Duty - From September 22nd, 2022
As of September 22nd, the nil-rate tax threshold has been increased from £125,000 to £250,000 for all property purchases in England and Northern Ireland.
For first-time buyers, the nil-rate tax threshold has increased from £300,000 to £425,000. It’s worth noting that to be eligible for first-time buyer stamp duty relief, first-time buyers cannot purchase a property valued above £625,000.
Above the nil-rate tax threshold, buyers will begin to pay stamp duty at the following new rates for each tax threshold:
If you can’t picture what this means for you then I recommend trying this Stamp Duty Calculator by Money Helper.
Stamp Duty on Higher Rate Transactions
If you’re buying a second home or a buy-to-let property in the UK, then you will still pay more stamp duty. The new rates for higher rate transactions are as follows:
Stamp duty remains a complex area of taxation, especially for overseas buyers, if you’re confused about how the new rates affect you, then please get in touch.
When Do the New Stamp Duty Rates Come into Effect?
The new stamp duty measures are in effect now and have been effective from the 23rd of September 2022. You can find more information about the Stamp Duty Land Tax (Reduction) Bill on the GOV.UK website here, or alternatively, give me a call, and I’d be happy to discuss how they have changed for you depending on your circumstances.
When Will Stamp Duty Rates Change Back?
At present, there has been no suggestion that the new stamp duty rates are temporary and so we can assume that they will be a permanent fixture for at least the foreseeable future. That said, there’s no guarantee that they will stick around for good, so you may want to make the most of them while you can.
What Effect Will These Stamp Duty Changes Have on the Property Market?
By increasing the nil-rate tax threshold, the UK government has just made the property market a lot more attractive to prospective buyers in England and Northern Ireland, especially those searching for their first home.
Given that buyers can save tens of thousands of pounds on property purchases we do expect to see a surge in sales in the coming months, making it a good time to consider selling.
However, as always, it’s not all good news.
While we do expect to see property sales increase a little, we don’t expect them to come all at once. This is because the new stamp duty rates are permanent and so buyers aren’t being forced to panic purchase within a limited time frame. It’s also worth considering the many other factors affecting the property market right now, such as mortgage interest rates, the cost of living crisis, and recent alterations to the energy cap.
Whether the new changes to stamp duty will be enough to keep the property market booming remains to be seen, but one thing is for sure, it’s a welcome alteration.
If you’d like to discuss buying a property or selling your home and aren’t sure whether now is the right time to do so, please call me for impartial advice.
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