Stamp Duty Cuts Saving Thousands

Recent news from the new Chancellor, Kwasi Kwarteng, will save UK home buyers thousands.

The announcement that took place at the House of Parliament last week confirmed a permanent stamp duty cut in the mini-budget. Buyers purchasing a property over £250,000 will save £2,500 from the new changes, whilst first time buyers could also reap reward as the level in which stamp duty is implemented has been significantly increased.

Previously, the first £125,000 of a property’s value was tax free. Buyers were then charged 2% of the value of the property above £125,000 and up to £250,000, and 5% on the portion between £250,001 and £925,000.

Under the new system, the first £250,000 of a property’s value will be exempt, and buyers will pay 5% of the value of the home from £250,001. The portion between £925,001 and £1.5m will continue to be taxed at 10%, and any property worth more than that will be subject to stamp duty rates of 12%.  The changes could save home owners a minimum of £2,500 when spending over £250,000.

It’s not only existing home owners that will see benefits. First time buyers will only have to pay stamp duty on homes worth over £425,000 and under £625,000. First-time buyer relief was previously set at £300,000 on properties costing up to £500,000.

The measures will reduce stamp duty bills for all home movers by up to £2,500, with first-time buyers able to access up to £8,750 in relief.

It’s been almost a year since the stamp duty holiday ended and although the housing market has held strong ever since, the rise in interest rates and the cost of living has meant buyers are now starting to crunch numbers. Every penny counts and it’s great to see buyers across the board saving money.

Jon Vickers – Branch Manager

How will it look for me?

Stamp duty is often not fully understood and the calculations can be confusing for many. See examples below of how it might look for you following recent cuts:

Example 1:

Pauline and John are selling their property and buying a new home . Pauline and John are not a first time buyers and don’t own any other properties.

Purchase Price: £500,000 (£250,000 above the new cap)
Previous Stamp Duty bill: £12,500
New Stamp Duty bill: £10,000
[Saving £2,500]

Example 2:

James and Molly are purchasing their first home together. Both of them have never owned a property before so are eligible for first time buyer relief.

Purchase Price: £400,000 (below the new £425,000 cap)
Previous Stamp Duty bill: £5,000
New Stamp Duty bill: £0
[Saving £5,000]

Example 3:

Tim is an existing home owner but is buying a property  to rent out as a buy-to-let property. Tim is not a first time buyer but will own more than one property. Tim therefore will pay additional stamp duty rates.

Purchase Price: £200,000
Previous Stamp Duty bill: £7,500
New Stamp Duty bill: £6,000
[Saving £1,500]

If you are buyer looking for your perfect home, get in touch with our team today to discuss your options on 0113 322 9533.

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