Mr Kwarteng confirmed the reduction to stand duty land tax while speaking in the House of Commons this morning. The move by Prime Minister Liz Truss’ Government is seen by many as an attempt to drive growth. Speaking to MPs, the Chancellor said: “I can announce we are cutting stamp duty. This is a permanent cut to stamp duty, effective as of today.” As part of the cut, no stamp duty will have to be spent on homes up to £250,000 and for first-time buyers the threshold will rise to £425,000.
Stamp duty is a tax that is levied on single property purchases or documents in England and Northern Ireland.
The transaction tax was paid on any property which is purchased at more than £125,000.
Higher rates are paid by taxpayers depending on certain thresholds. Different land taxes apply to those buying property in Scotland and Wales.
Earlier this week, rumours of a stamp duty cut sent shares in the UK’s housebuilders soaring on the London stock market.
READ MORE: Entirely free way to save £195 a year on your energy bills – clever money saving hack
Will Hale, the CEO of Key, noted that the stamp duty cut will likely be “popular” among homeowners.
He added: “The changes to stamp duty are likely to be particularly popular and the Bank of Mum and Dad is likely to see a surge in business as people look to family members for support.
“We saw £1milllion worth of housing equity released during the Stamp Duty Holiday as older family members looked to help children and grandchildren take their first steps on the ladder so it will be interesting to see the impact of these changes.
“With rates rising and high street lenders being more careful than ever about what they will allow people to borrow, having a sizable deposit is likely to be even more important.”
READ MORE: Britons in higher bracket can do 2 main things to reduce tax payments
What are the rates of stamp duty?
As part of the mini-Budget announcement, the nil rate band will be doubled from £125,000 to £250,000.
This means that 200,000 more Britons will be able to buy a home without having to pay any stamp duty every year.
The average household moving into a semi-detached property will save £2,500 on stamp duty and £1,150 on energy bills.
If they have a combined income of £50,000, families will save an extra £560 on tax which comes to a saving of around £4,200 in total.
Accodring to the Government website, here is a list of the current stamp duty rates for single propertiy costing
- Up to £250,000 – Zero percent
- The next £675,000 (the portion from £250,001 to £925,000) – Five percent
- The next £575,000 (the portion from £925,001 to £1.5 million) – 10 percent
- The remaining amount (the portion above £1.5 million) – 12 percent
On top of this, the Government outlined support for first-time buyers who will no longer pay stamp duty up to £425,000 – having previously been £300,000.
The value of the property on which first time buyers can claim back discounted relief will go up from £500,000 to £625,000.
When will stamp duty be cut?
In his speech, Kwasi Kwarteng confirmed the property tax cut will take effect from midnight today (Friday 23 Sept 2022).
He also announced further assistance for homebuyers by raising the disposal of surplus Government land to build new homes.
On today’s changes to stamp duty and promise to help people get on the property ladder, Simon Bath, the CEO of iPlace Global, referred to the Chancellor’s Budget as “welcome news”.
“The Chancellor’s announcement to build more homes across the country is welcome news for the market.
“However, the Government must ensure that support is given to all ends of the spectrum – from those looking to buy their first home to those struggling with mortgage repayments.
“New schemes must be introduced to replace old ones like Help to Buy, especially for those who can’t afford the opportunity to step onto the ladder.”