As high interest rates on mortgages make it more difficult to buy and sell properties, the Stamp Duty Land Tax (Temporary Relief) Bill was created to help reduce the cost for buyers and support the growth of the housing market.
The bill temporarily increases the amount that a purchaser can pay for a residential property before they become liable to Stamp Duty Land Tax (SDLT). It increases the residential nil-rate tax threshold from £125,000 to £250,000 but maintains the higher rate of 3% on additional residential properties.
The nil-rate threshold for First Time Buyers’ Relief has also been increased from £300,000 to £425,000. The maximum property value that is eligible for First Time Buyers’ Relief has also been increased to £625,000.
What is stamp duty?
Stamp duty, or Stamp Duty Land Tax (often abbreviated to SDLT), is a tax applied by the government to the purchaser of a residential property purchased at over £250,000.
It must be paid within 14 days of completing the purchase of a residential property.
Law firms often deal with this on your behalf, which means it is sometimes included as part of the quote for conveyancing.
How much do I have to pay?
The amount you pay depends on when you bought the property, how much you paid for it and whether you are eligible for relief or exemption.
There are different rates of SDLT when buying a residential property, the rate you pay will depend on whether you:
- are a first-time buyer.
- already own a property and are buying an additional property.
- you’re not a UK resident.
Stamp duty rates
Stamp duty rates changed in September 2022, and the following rates will remain in place until March 2025.
Those purchasing another residential property will typically pay an additional 3% on top of the standard rate:
|Purchase price||SDLT rate||Buy to Let/Additional Home Rate|
|Up to £250,000||0%||3%|
|£250,001 to £925,000||5%||8%|
|£925,001 to £1.5 million||10%||13%|
|Over £1.5 million||12%||15%|
Rates if you’re buying your first home
You can claim a discount (relief), so you don’t pay any Stamp Duty Land Tax up to £425,000 and pay 5% on the property purchase price from £425,001 to £625,000.
You’re eligible to claim the relief if you and anyone else you’re buying with are first-time buyers.
If the property price is over £625,000, you follow the rules for people who have bought a home before.
What is Land Transaction Tax?
LTT replaced Stamp Duty Land Tax (SDLT) in Wales from 1 April 2018. The Welsh Revenue Authority (WRA) collects and manages the tax for the Welsh Government.
You must pay LTT if you buy a property or land over a certain value in Wales. This value is £225,000 for both residential properties (if you do not own other property), and non-residential land and property.
The amount of tax you pay depends on the value of the property but can be worked out using the Land Transaction Tax Calculator.
You must send a LTT return to the WRA and pay the tax within 30 days of the day after completion (or other ‘effective date’ of the transaction).
Your solicitor or conveyancer can file your return online and pay the tax on your behalf, this amount will then be added to your invoice.
How QualitySolicitors JA Hughes can help
Law firms often manage the stamp duty on your behalf, and we will often include this as part of our quote for conveyancing.
Your lawyer will be happy to advise if you have any queries about SDLT or these changes. You can also use the government's Stamp Duty Land Tax (SDLT) calculator to work out the SDLT on your purchase.