Standing at the dispatch box, the Rt Hon Kwasi Kwarteg MP, gave his first budget as Chancellor of the Exchequer. In the days leading up to the announcement, it was leaked that HM Government was looking at cutting the rate of Stamp Duty Land Tax (SDLT). It has now been confirmed that from today, new permanent cuts to SDLT will be in place.
At the moment, first-time buyers pay no SDLT up to £300,000 on their first house purchase (providing they are buying below £500,000). For others, there is currently no SDLT on the first £125,000 of a property (a nil-rate band of sorts). Between £125,001 and £250,000, a 2% tax is applied; 5% between £250,001 and £925,000; 10% between £925,001 and £1.5 million; and 12% on the value of a property beyond £1.5 million. *
Today it was announced that the first-time buyers pay no SDLT up to £425,000 on their first house purchase (provided they are buying below £625,000), and the nil rate is being doubled to £250,000. **
The previous SDLT holiday which ran from June 2020 to June 2021, was designed to prop up the property market after the body blow that was COVID-19. The original holiday enabled first-time buyers to avoid stamp duty land tax on up to £500,000 of a house purchase and on average, saved individual buyers £15,000. However, some saw the holiday as stimulating an already overheated market.
I, like many in the conveyancing profession, remember the previous SDLT holiday as a time of frantic work and soaring workloads (3AM finishes became the norm, rather than the exception). Seeing these cuts are permanent, rather than being a “holiday”, may cushion the blow for my fellow conveyancers – but will still have an effect on buyers, sellers, and the housing market as a whole.
HMRC confirmed on Wednesday 21 September 2022 that SDLT receipts for the period April 2022 – August 2022 are now at a total of £8.9 billion – £2 billion higher than the same period a year earlier – an increase of around 29%. Following the previous leaks of a proposed cut to SDLT, the Taxpayers’ Alliance (TPA) published research about benefits this would provide. The TPA forecasts that SDLT will continue to have a negative effect on growth and investment if the current system remains in place. TPA went on to say that without SDLT, the country’s Gross Domestic Product would be £27 billion higher by 2029, and investment would rise by £7 billion.
It’s too soon to say what these cuts will be for the UK as a whole, and more information will follow – but it does appear the buyers (who were due to complete today at least) will unexpectedly find themselves with some spare cash.
At Bishop & Sewell, we have nearly 40 years’ experience in conveyancing, with a particular focus on property law. We always treat our clients as individuals with their own particular needs, and concerns.
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*This does not deal with other surcharges and some buyers may face (resident overseas, additional properties etc)
This article is intended as a general summary on the law – no reliance should be placed on it. This is commentary on breaking developments – we expect updates and/or clarifications to be published at a later date by HM Government