Autumn Statement 2022: cuts due to end in 2025
Two of the surviving measures introduced in last years Mini-Budget are set to stay until 31 March 2025. Chancellor of the Exchequer Jeremy Hunt confirmed in his Autumn Statement 2022 that the 0% threshold for Stamp Duty Land Tax (SDLT) will remain at £250,000. Potentially saving residential property purchasers in England and Wales £2,500.
He has also confirmed that the increase in First-Time Buyer Relief thresholds will remain until this time. In the Autumn Statement, delivered on 17 November 2022, Hunt said this decision resulted from the Office for Budget Responsibility's expectation that housing activity would slow over the next two years.
‘After that I will sunset the measure, creating an incentive to support the housing market and the jobs associated with it by boosting transactions during the period the economy most needs it,’ he added.
On 23 September, the former Chancellor, Kwasi Kwarteng, confirmed a SDLT cut in the Mini-Budget, effective from that date. The change doubled the threshold from which SDLT on the purchase of residential properties in England and Northern Ireland is payable from £125,000 to £250,000.
The threshold at which first-time buyers begin to pay SDLT was increased from £300,000 to £425,000, and the maximum value of a property on which First-Time Buyer Relief can be claimed was also increased from £500,000 to £625,000. This equates to a potential saving of up to £6,250.
What is Stamp Duty Land Tax (SDLT)?
This is a tax levied by the UK government on certain land and property transactions. You must pay SDLT if you buy a property or land over a certain price in England and Northern Ireland. The tax is different if the property or land is in Scotland (pay Land and Buildings Transaction Tax) or in Wales (pay Land Transaction Tax if the sale was completed on or after 1 April 2018).
It’s important to understand your obligations, as failure to pay SDLT can result in significant financial penalties so obtaining professional advice is beneficial. By understanding SDLT and how it applies, you’ll be able to make an informed decision when making an offer on a new home.
The amount you pay can depend on the price of the property, the location of the property, whether you’re a first-time buyer or if you’re a UK resident. Buyers should always ensure they budget accordingly when purchasing a new home as it can be easy to overlook these additional costs.
New SDLT rates in England and Northern Ireland
The threshold at which SDLT is paid has now doubled from £125,000 to £250,000 with the following rates now applicable:
£0 – £250,000 (£425,000 for first-time buyers) = 0%
£250,000 – £925,000 = 5%
£925,000 – £1,500,000 = 10%
£1,500,000+ = 12%
For first-time buyers there is a discounted SDLT rate on properties costing £500,000 to £625,000, which means some first-time buyers won’t have to pay SDLT at all.
In England and Northern Ireland you will have 14 days to pay SDLT, whereas in Scotland and Wales you will have 30 days to pay from the point of purchase.
Tax rates in Scotland
In Scotland, the system differs slightly from England with Land and Building Transaction Tax (LBTT) being used across the region. This came into force in 2015 as a replacement for SDLT. The current LBTT rates are:
£0 – £145,000 (£175,000 for first-time buyers) = 0%
£145,001 – £250,000 = 2%
£250,001 – £325,000 = 5%
£325,001 – £750,000 = 10%
£750,001+ = 12%
Tax rates in Wales
Wales also replaced their tax rates in 2018 with Land Transaction Tax. Therefore, the current tax rates are as follows:
£0 – £180,000 = 0%
£180,001 – £250,000 = 3.5%
£250,001 – £400,000 = 5%
£400,001 – £750,000 = 7.5%
£750,001 – £1.5m = 10%
£1.5m + = 12%
Need a mortgage that works for you?
Whether you’re looking for a competitive mortgage rate or advice on what’s right for you, and a process you can follow step-by-step, we can help you find a mortgage that works for your unique needs. To discuss your options, contact The Surrey Mortgage Broker – telephone 01252 759233– email richard@thesurreymortgagebroker.co.uk
