We’ll save £6,250 thanks to the Stamp Duty cut announced in the mini Budget
FIRST-TIME buyers Lauren Hutchinson and Matty Hooper will save £6,250 thanks to today’s stamp duty cut.
Bank worker Lauren, 28, and her boyfriend Matty, 29, an accountant, have been living with his parents in order to save money on rent so today’s news is a huge boost.
The couple are among the 200,000 homebuyers set to benefit from the stamp duty changes announced today.
In his mini-budget, Chancellor Kwasi Kwarteng doubled the threshold at which home buyers pay stamp duty from £125,000 to £250,000 meaning thousands more people won’t pay any tax.
For first-time buyers the threshold is being raised from £300,000 to £425,000.
And the maximum value of a property on which first-time buyers’ relief can be claimed will also increase from £500,000 to £625,000.
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It comes as the Chancellor announced:
- A beer price rise has been cancelled
- National Insurance rise scrapped saving up to £330 a year
- Income tax cut from next April saving average £124 a year
- Tax cuts for thousands new investment zones
- Investment zone boost for thousands in certain areas
- Corporation tax hike scrapped
- Bankers’ bonus cap ditched
Matty and Lauren are hoping to buy a three-bedroom house for around £500,000 in or near Blandford Forum, Dorset, where they live.
They will pay £3,750 in stamp duty, down from £10,000 if they had bought before the tax cut was announced.
Lauren, who has a mortgage offer, said: “We’ll save thousands thanks to the stamp duty cut.
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“It’s great news.
“It makes such a big difference to our purchase.
“I’ve been saving since about 2017 to buy a property, and we moved to live with my boyfriend’s parents 18 months ago to save money on rent.
“We’ve really cut back on costs to try and save, reducing going out and keeping an eye on what we spend.
“It’s difficult to fund a property purchase.
“House prices have increased so much since Covid, with many properties we view going for above the asking price and with cash buyers.
“stamp duty is such a big extra cost when buying, in addition to all the other cost of living prices going up at the moment.
“So saving on stamp duty will help us afford the property we want. “We hope to have something left over to put towards furniture and tidying up the property.
“We’ve got a viewing on Saturday and another one on Monday and so it’s nice to know about the stamp duty news before then.”
Lauren and Matty, who are both higher rate taxpayers, have already faced one major disappointment after a house purchase fell through in June.
The seller pulled out after their chain collapsed, leaving the couple in limbo.
Lauren said: “Our mortgage had been approved – then the seller changed their mind.
“The bank agreed for the mortgage offer to be moved to a different property.
“Now we could actually save due to the stamp duty cut.”
Announcing the stamp duty cut, the Chancellor said: “First time buyers currently pay no stamp duty on the first £300,000.
“We’re increasing that threshold as well, to £425,000.
“And we’re going to increase the value of the property on which first time buyers can claim relief, from £500,000 to £625,000.
“The steps we’ve taken today mean 200,000 more people will be taken out of paying stamp duty altogether.
“This is a permanent cut to stamp duty, effective from today”
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.
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.
If you are a first-time buyer you can get a discount if the following applies to you:
- You, and anyone else you’re buying with, are first-time buyers
- The purchase price is £500,000 or less
This rule came in on July 1, 2021. You’ll also be eligible for this discount if you bought your first home before July 8, 2020.
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How much you pay depends on whether the land or property is residential use or non-residential or mixed-use.
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.