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Stamp Duty Land Tax Reduction — How much will I pay?

A photo of Sarah Workman
27th September 2022

The Stamp duty changes made big news last week, with buyers potentially saving £2,500 on their stamp duty. The changes are shown below.

First Time Buyer Rate

There was an increase in the level at which first time buyers will have to pay stamp duty, from £300k to £425K. Therefore first time buyers will not pay any stamp duty on the first £425k of a purchase price. After the first £425k, the percentage paid on the remaining proportion of the purchase price will be the same as the standard rate shown below. The first time buyer purchase price level, which caps the amount a first time buyer can purchase for and benefit from the first time buyer rates, has also increased from £500,000 to £625,000. First time buyers can therefore now purchase a property up to the value of £625,000 and still benefit from the first time buyer rates. If you are a first time buyer purchasing over £625k you will pay standard rate stamp duty for the whole purchase price.

Standard rate (mainly if you are selling and buying, purchasing and are a not a first time buyer, and you are not liable for higher rate)

The changes in the mini-budget mean that the level at which stamp duty now becomes payable has increased from £125k to £250k for standard rate stamp duty.

The new standard rates are as follows (the percentage is for that proportion of the purchase price):-

£0 - £250k 0%

£250k – £925k 5%

£925k – £1.5 mil 10%

Over £1.5 mil 12%

Therefore, if, for example, you are purchasing a property at £325,000 at standard rate stamp duty, the previous rates were as follows:-

£0- £125k 0%

125k – £250k 2% £2500

£250k - £325k 5% £3,750

Meaning a total of £6,250 payable in stamp duty

Now that the stamp duty levels have changed you will pay:-

£0 – £250K 0%

£250k - £325k 5% £3,750

Meaning stamp now payable will be £3,750, saving £2,500 on the previous rates

Higher Rate

There is also a saving to be had for people purchasing who are liable for higher rate stamp duty. Higher rate stamp duty is typically payable if you are purchasing a second property, purchasing a property in a company name, or if you are purchasing a new main residence but will not have sold your current main residence on completion (although you can apply for a refund of the additional payment for the higher rate band if a sale of that main residence completes with 36 months of completion of your purchase). Whilst the higher rate stamp duty rates are still chargeable from £0, and the rate is 3% higher than standard rate stamp duty, the brackets have now changed to decrease the amount payable up to the first £250k. This will mean that people purchasing properties who fall into the higher rate category can also potentially benefit from the stamp duty changes in the mini budget on the 23rd September.

The new higher rates are as follows (the percentage is for that proportion of the purchase price):-

£0 - £250k 3%

£250k - £925k 8%

£925k- £1.5 mil 13%

The remaining proportion above £1.5 mil 15%

For example, if you are buying a property that is liable for higher rate stamp duty for £300,000 you would have paid:-

£0 - £125k 3% £3,750

£125k - £250k 5% £6,250

£250k - £300k 8% £4,000

A total of £14,000 stamp duty

As from the mini-budget on 23rd September, you will now pay:-

£0 - £250k 3% £7,500

£250k - £300k 8% £4,000

Paying a total of £11,500, saving £2,500 on the previous rates

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