In his recent mini-Budget, the then Chancellor announced a number of stamp duty land tax (SDLT) changes. What are the changes and how will they affect the SDLT that you will pay on your property purchase?
Residential property
SDLT on residential property is payable at the residential rates where the consideration exceeds the residential threshold. A supplement of 3% applies where the purchase is of a second or subsequent residential property costing ยฃ40,000 or more which is not an exchange of your main residence.
The SDLT residential duty threshold was doubled from ยฃ125,000 to ยฃ250,000 with effect for completions on or after 23 September. The rates and thresholds applying from that date are as shown in the table below. SDLT is calculated on each slice of the consideration at the rate applying to that band.
| Consideration | First property or main residence exchange | Additional properties costing ยฃ40,000 or more |
| Up to ยฃ250,000 | 0% | 3% |
| The next ยฃ675,000 (from ยฃ250,001 to ยฃ925,000) | 5% | 8% |
| The next ยฃ575,000 (from ยฃ925,001 to ยฃ1.5 million) | 10% | 13% |
| The remaining amount (above ยฃ1.5 million) | 12% | 15% |
From 1 October 2021 to 22 September 2022, the residential threshold was ยฃ125,000 and SDLT was payable at the rate of 2% (5% for additional properties) on consideration between ยฃ125,001 and ยฃ250,000. The increase in the SDLT residential threshold reduces the SDLT payable on a property costing at least ยฃ250,000 by ยฃ2,500 (ยฃ125,000 @ 2%).
First-time buyers
First-time buyers benefit from a higher residential SDLT threshold. This was increased from ยฃ300,000 to ยฃ425,000 with effect from 23 September 2022. The first-time buyer threshold only applies if the property costs ยฃ625,000 or less (ยฃ500,000 prior to 23 September 2022).
Consequently, from 23 September 2022, a first-time buyer will pay no SDLT if they purchase a residential property for ยฃ425,000 or less. If the purchase price is between ยฃ425,000 and ยฃ625,000, they will pay no SDLT on the first ยฃ425,000 and SDLT at 5% on the excess over ยฃ425,000. For example, a first-time buyer purchasing a property costing ยฃ500,000 will pay SDLT of ยฃ3,750 ((ยฃ500,000 – ยฃ425,000) @ 5%). The increase in the threshold will mean that a purchaser who is eligible for the first-time buyer threshold will pay ยฃ6,250 less in SDLT than previously on a residential property costing at least ยฃ425,000 (ยฃ125,000 @ 5%) and less than the first-time buyer ceiling.
If the first-time buyer pays more than ยฃ625,000 for their property, the first-time buyer threshold does not apply; the normal residential threshold of ยฃ250,000 applies instead. SDLT is calculated at the normal residential rates as shown in the above table.
Partner note: Finance Act 2003, ss. 55, 55A, 57AA, 57B.
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