Measure
Effective from 23 September 2022, the government has introduced an increase to the threshold above which Stamp Duty Land Tax (SDLT) must be paid on the purchase of residential property in England and Northern Ireland, from £125,000 to £250,000. The change will result in a maximum saving of £2,500 for purchasers of residential property. The thresholds and rates on which SDLT is payable above £250,000 remain unchanged.
Separately, the threshold at which first-time buyers begin to pay SDLT will increase 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. This will result in an increased benefit for first-time buyers of up to £11,250.
Purchasers buying residential property in England and Northern Ireland for more than £125,000. All such purchasers will benefit, including those who purchase second homes and additional residential properties.
The new threshold will take effect from 23 September 2022. Ordinarily this should mean the change will benefit those who have already exchanged contracts prior to that date but not yet completed.
The SDLT cut of up to £2,500 will be welcome news for buyers in England and Northern Ireland. Buyers elsewhere within the UK will need to wait to see if the devolved administrations follow suit.
This measure may have much less impact than the previous SDLT holiday announced in July 2020 which provided an exemption up to £500,000, whereas the benefit of today’s announcement stops at £250,000 for those who are not first-time buyers. The previous SDLT holiday was estimated to cost around £4bn per year while this measure is costed by the government at around £1.5bn.
As the change is, on the face of it, permanent, it does not carry the same immediate incentive to act as a temporary measure would have had.
For more information on the Scottish perspective of this measure please see the article on the Scottish commentary.