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Home and dry... joy for first time buyers – better off by up to £11,250 – in Kwarteng stamp duty boost to get

By Sarah Bridge, Sarah Davidson and Rachel Rickard Straus

HOMEBUYERS are celebrating after Chancellor Kwasi Kwarteng took an axe to stamp duty in his mini-Budget on Friday. Movers will save up to £2,500, and 200,000 more homebuyers every year will pay no stamp duty at all. As well as putting money back in the pockets of buyers, Kwarteng said he hoped the move would ‘support growth, increase confidence and help families aspiring to own their own home’.

Here’s how it will work:

What will homebuyers pay from now on?

AS OF last Friday, no stamp duty is payable on the first £250,000 of the price of a property. This is a 100 per cent increase from the previous threshold of £125,000.

The other bands remain unchanged. That means any amount above £250,000 is taxed at 5 per cent, until the 10 per cent threshold kicks in at £925,000. This rate of 10 per cent is payable from £925,000 to £1.5million, and anything over that attracts stamp duty at 12 per cent.

The cuts mean someone buying a home costing the UK average of £290,000 will therefore see their bill cut from £4,500 to £2,000.

Chancellors have announced socalled stamp duty holidays in the past – time-limited cuts to boost the economy and support the housing market. The most recent one was announced by former Chancellor

Rishi Sunak during the pandemic.

But this change is permanent.

What about first-time buyers?

FIRST-TIME buyers already benefited from an additional perk, which meant that they did not pay stamp duty on the first £300,000 of their home. This has been raised to £425,000.

Furthermore, the value of the property on which first-time buyers can claim relief has been raised from £500,000 to £625,000. That means they could save up to £11,250 thanks to the changes.

First-time buyers in the most expensive parts of the country such as London and the South East will inevitably benefit the most.

When do the changes come into effect?

ANYONE who completed a property purchase after the announcement was made on Friday will benefit from the lower rates.

Buyers have 14 days from the point at which they complete on a purchase to file a return to Revenue & Customs and pay any stamp duty owed.

Do they affect the whole of the UK?

NO, they only affect buyers in England and Northern Ireland.

Scotland and Wales have their own property taxes. Land Transaction Tax (LTT) replaced stamp duty in Wales in 2018. It applies to properties above £180,000 in value.

In Scotland, buyers pay Land and Buildings Transaction Tax (LBTT) and it applies on properties costing more than £145,000 – or more than £175,000 for first-time buyers. The Scottish government said last week it would set out plans on LBTT ‘as part of the normal budget process’.

Will landlords also benefit from cuts?

LANDLORDS – and anyone buying a second home – will still have to pay an additional 3 percentage point stamp duty surcharge on property purchases.

But they will still benefit from the increase to the threshold at which stamp duty is payable. As of Friday, they will pay 3 per cent tax on the first £250,000, 8 per cent between £250,001 and £925,000, and so on.

Personal Finance

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