Stamp duty holiday: Rishi Sunak raises SDLT threshold – changes to save buyers thousands
Speaking in the House of Commons today, the Chancellor of the Exchequer Rishi Sunak announced he would raise the threshold for Stamp Duty Land Tax (SDLT). The temporary move has come in an effort to give a boost to the housing market – encouraging buyers to move.
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Mr Sunak said: “Today I am increasing the threshold to half a million pounds.”
This will be a temporary cut until March 31 next year.
The changes will take effect immediately, and could save people thousands on average.
Richard Donnell, Research and Insight Director at Zoopla, commented: “The immediate increase in the Stamp Duty threshold will help sustain the rebound in housing market activity across England. The benefits will be immediate; nine of ten transactions in England will no longer be subject to the tax and in London and the South East, home to more expensive properties, homebuyers can save up to £14,999 overnight.
“The Government will expect the change to stimulate more housing sales over the second half of the year and that savings made by buyers will be reinvested in home improvements, white goods and furniture, rather than bidding up the cost of housing.”
Currently, the threshold for SDLT for residential properties is £125,000.
Up to this threshold, the SDLT rate is zero, with the rates increasing on different portions of the purchase price of a property or lease premium or transfer value.
Under the current rules, the portion from £125,001 to £250,000 has a two percent SDLT rate.
The next £675,000 (meaning the portion from £250,001 to £925,000) is subject to a five percent SDLT rate.
The SDLT rate is 10 percent on any portion from £925,001 to £1.5 million, while anything above this amount applies at 12 percent.
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The rates can be higher for additional properties.
First-time buyers can claim a discount – known as SDLT relief – meaning they don’t pay any tax up to £300,000.
Then, they would pay five percent on any portion from £300,001 to £500,000.
But, should the price of the purchase be more than £500,000, then the first-time buyers would follow the rules for people who have bought a home before.
First-time buyers are eligible if:
- They, and anyone else they’re buying with, are first-time buyers
- They complete the purchase on or after November 22, 2017.
It’s possible to work out how much Stamp Duty a person will pay for a new residential property by using the SDLT calculator.
This is hosted by HM Revenue and Customs (HMRC) on the GOV.UK website.
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