What does Kwarteng’s stamp duty cut mean for UK homebuyers? | Mini budget 2022

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the chancellor, Quasi Quartenghas confirmed a permanent stamp duty reduction with no tax payable on properties up to a value of £250,000.

Kwarteng announced the policy in a mini-budget Friday, almost a year after the last stamp duty holiday ended. He also raised the threshold for first-time buyers to £425,000. Here we explain the changes in full.

What is stamp duty and how is it changing?

Stamp duty is a tax paid by home buyers in England and Northern Ireland, based on the value of the property they buy. The government has announced a permanent change to how the tax works, with the threshold at which buyers must pay duty rising from £125,000 to £250,000.

Previously, the first £125,000 of a property’s value was tax-free. Buyers were then charged 2% of the property’s value above this threshold up to £250,000 and 5% on the portion between £250,001 and £925,000.

Under the new system, the first £250,000 of a property’s value will be exempt and buyers will pay 5% of the property’s value from £250,001. The part between £925,001 and £1.5m. will continue to be taxed at 10% and any property worth more than that will be subject to stamp duty at 12%.

The level at which first-time buyers must pay stamp duty will rise from £300,000 to £425,000 in a move to boost home ownership. Under the plans, the first-time buyer exemption will apply to properties worth up to £625,000, compared to the current £500,000.

What are the rules in Scotland and Wales?

A corresponding tax is paid Scotland and Wales, but the rules and thresholds are different. In Scotland it is called Land and Building Transaction Tax and is not payable on the first £145,000 of a property’s value.

Meanwhile, i Wales, the tax is called the Land Transaction Tax, which is payable on properties above the value of £180,000. As the tax is devolved, the Scottish and Welsh governments will receive funds to allocate “as they see fit”, the Treasury said today.

Scotland and Wales introduced their own tax cuts when they stamp duty holiday in England and Northern Ireland announced in 2020.

I am in the process of buying a home – what does this mean for me?

People in the process of buying a property should benefit from the tax relief as it comes into effect on Friday. Contact your attorney to make sure you get the discount.

What do experts say about the changes?

Reaction from property experts has been mixed, with some saying it will ease cost pressures on buyers in the short term, while warning it will push up house prices.

Sarah Coles, senior personal finance analyst at Hargreaves Lansdown, said: “The horrendous cost of buying a house has just become cheaper – at least for now.

“Even if the change makes more people buy, a lack of buyers is not the biggest problem facing the property market. The real drag on the property market is a severe lack of supply because the average agent only has 36 properties on the book.”

But Tim Bannister, Rightmove’s housing expert, said that while it could lead to some “unseasonal price rises over the next few months”, the permanent change could mean the rise in demand is slower than the temporary cut in 2020. “Plus buyers can save money up to £15,000 during the temporary stamp duty holiday, while the saving is lower with this change,” he said.

“The change to the first-time buyer threshold means we could see more first-time buyers who can afford it make the leap to a bigger home as their first move.”

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