Buyers currently pay stamp duty after £125,000 of a home’s purchase price but, today, that threshold was doubled. This means buyers no longer pay stamp duty tax on the first £250,000 of a property purchase.
The property price at which first-time buyers will pay stamp duty will be increased to £425,000, raising it from £300,000.
Before today’s announcement, stamp duty relief was not available for any first-time buyer home priced over £500,000. This threshold will now be raised to £625,000.
The Chancellor said: “Homeownership is the most common route for people to own an asset giving them a stake in the success of our economy and society, so to support growth, increase confidence and help families aspiring to own their own home I can announce that we are cutting stamp duty.”
He continued: “The steps we’ve taken today mean that 200,000 people will be taken out of paying stamp duty all together. This is a permanent cut to stamp duty effective from today.”
According to the Government’s Growth Plan, today’s measures “will reduce stamp duty bills across the board for all movers by up to £2,500 with first-time buyers able to access up £11,250 in relief.”
The average London sold house price now stands at £543,517 according to ONS which, until today, would have equated to a £17,175 stamp duty tax bill for a home buyer. Now, the amount of stamp duty payable will be £14,675, a saving of £2,500.
For a London first-time buyer, now able to claim stamp duty relief on properties priced up to £625,000, the amount of stamp duty payable on the average London home will now be £5,925.
The average UK house price is £292,000 according to Land Registry, meaning buyers of the ‘average home’ will pay stamp duty on £42,000 of the purchase price rather than £167,000 of it. From today, the stamp duty payable on the average UK home will be £2,100 rather than £4,600 — a saving of £2,500.
New stamp duty rates for a single property purchase
Property purchase price
Up to £250,000
The portion from £250,001 to £925,000
The portion from £925,001 to £1.5 million
The portion above £1.5 million
Today’s changes will apply only in England and Northern Ireland. Stamp duty tax is not charged in Scotland, instead buyers pay Land Buildings Transaction Tax. Similarly, stamp duty is not charged in Wales where buyers pay Land Transaction Tax.
Responding to Mr Kwarteng, Shadow Chancellor Rachel Reeves said: “It’s going to take much more than a stamp duty cut to get our country back on track and homeownership back to the levels last seen under a Labour government.”
“These stamp duty changes have been tried before. Last time the government did it a third of the people who benefitted were buying a second home, a third home, or a buy-to-let property. Is that really the best use of taxpayers’ money when borrowing and debt are already so high?
“And can the Chancellor confirm today how much of the stamp duty cut will go to those purchasing multiple properties? Instead of stamp duties going up and down like a yo-yo, we need to get building, we need to target support at first-time buyers, and tackle the issue of homes being sold to overseas investors.”