THOUSANDS of homebuyers are still set to save up to £6,250 as a cut to stamp duty is stay in place.
In a mini-budget statement today, the new Chancellor Jeremy Hunt confirmed that the previous cut to stamp duty is to remain in place.
Stamp duty land tax (SDLT) is a lump sum payment you have to make when purchasing property over a certain threshold.
Under the previous system, no stamp duty was paid on the first £125,000 of any property purchase.
The government doubled that in last month's mini-budget – to £250,000 – for all home purchases.
The threshold at which the duty was paid for first-time buyers was £300,000. But this increased, to £425,000.
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The maximum value of a property on which first-time buyers’ relief can be claimed also increased from £500,000 to £625,000.
How much buyers pay depends on the price and type of property, including if it's residential use or non-residential or mixed-use.
An increase to the thresholds at which you pay the tax could save some buyers thousands of pounds.
Jeremy Hunt also announced that help with energy bills for households will only last until April, with a review to find a “new approach” that will “cost the taxpayer significantly less”.
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Prime Minister Liz Truss had already been forced to perform a series of U-turns abandoning former Chancellor Kwasi Kwarteng’s plans.
The Chancellor confirmed that the cut to income tax won't take place and the basic rate will remain at 20% indefinitely.
Just weeks ago, Mr Kwarteng had binned planned hikes to duty rates for beer, for cider, for wine, and for spirits.
But as part of plans to raise £32billion of cash and help stabilise the markets, that will not go ahead as planned.
But the government will continue with its reversal of the 1.25 percentage point increase in national insurance contributions, the chancellor said.
During his statement, Mr Hunt said: “There will be more difficult decisions, I’m afraid, on both tax and spending as we deliver our commitment to get debt falling as a share of the economy over the medium term.
“All departments will need to redouble their efforts to find savings and some areas of spending will need to be cut.
“But as I promised at the weekend, our priority in making the difficult decisions that lie ahead will always be the most vulnerable and I remain extremely confident about the UK’s long-term economic prospects as we deliver our mission to go for growth.”
Stamp duty can be difficult to understand, below we explain everything you need to know.
What is stamp duty?
Stamp duty is a payment you'll need to make if you're buying a property or piece of land.
You pay the tax when you:
- buy a freehold property
- buy a new or existing leasehold
- buy a property through a shared ownership scheme
- are transferred land or property in exchange for payment, for example you take on a mortgage or buy a share in a house
The rate a buyer has to fork out depends on the price and type of property.
You only pay when the house you're buying costs more than a certain threshold- this is now £250,000 for residential properties.
The threshold for non-residential land and properties is now £425,000.
If you buy a property for less than these thresholds, then you don’t have to pay the tax.
Back in 2020 the Treasury temporarily raised the stamp duty threshold from £125,000 to £500,000 for property sales in England and Northern Ireland.
Who pays for stamp duty right now?
Home buyers always pay for stamp duty, not the seller.
This is often done through a solicitor on your behalf as part of the buying process, according to HomeOwnersAlliance.
Home buyers have fourteen days from the date of purchasing a property to file a return to HMRC with any stamp duty due.
Not everyone pays the same amount.
How much you pay depends on whether the land or property is residential use or non-residential or mixed-use.
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There’s a long list of different types of non-residential or mixed-use properties, such as shops, offices and agricultural land, which you can check here.
The government’s Stamp Duty Land Tax Calculator can be used to understand what you should pay.
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