Stamp duty is a tax paid by home buyers
(Picture: Daniel Lynch)Chancellor Kwasi Kwarteng’s mini-budget announcement on Friday included the much-awaited stamp duty cut.
The cut, which could save some buyers more than £10,000, is the biggest tax reduction the UK has seen since 1972.
Kwarteng stated the move would “support growth, increase confidence and help families aspiring to own their own home”.
Our guide is here to help navigate you through the new stamp duty, how much you’ll need to pay, and how to access a stamp-duty calculator.
How much is stamp duty?
Stamp duty is a tax that’s charged when you buy a property in the UK, but you’ll only need to pay it if the price of that property reaches a certain threshold.
Those buying a residential property or a piece of land in England and Northern Ireland pay the stamp duty land tax (SDLT) levy.
In Scotland, it’s referred to as Land and Buildings Transaction Tax (LBTT ) and Land Transaction Tax (LTT) for Wales.
Under the new system, no stamp duty is paid on the first £250,000 of a property purchase.
Stamp duty is levied at five per cent between £250,001 and £925,000, at 10 per cent between £925,001 and £1,500,000, and at 12 per cent for anything above £1.5m.
First-time buyers do not pay stamp duty below the £425,000 threshold and then at five per cent from £425,001 to £625,000.
If purchasing a new residential property means you'll be the owner of more than one, you'll often have to pay an additional three per cent on top of SDLT charges.
The tax is imposed on all real estate, freehold, and leasehold, whether purchased outright or through a mortgage.
First-time buyers in London and the south-east could potentially save as much as £11,250, according to the Government.
How to access the tax calculator
You can work out how much tax you will have to pay via the SDLT calculator on the Government website once it has been updated to show the new thresholds. As of today, 26 September, the Government website advises checking this guidance to work out stamp duty payable.
There are a few things you need to know before you use the calculator such as, if the property is a first-time buy or a replacement, freehold or leasehold, is the transaction for a residential or non-residential, the date of the transaction, whether the buyers are UK or non-UK residents, if you are buying as an individual or a couple or a company or trust, and will the purchase be the only property you own.
Once all your data is entered, the calculator will provide a figure for the total SDLT due.
In England and Northern Ireland, you only get 14 days to pay your tax.
