The chancellor, Kwasi Kwarteng, has confirmed a permanent stamp duty cut, with no tax to be paid on properties up to the value of £250,000.
Kwarteng announced the policy in a mini-budget on Friday, almost a year after the last stamp duty holiday ended. He also increased the threshold for first-time buyers to £425,000. Here we explain the changes in full.
Stamp duty is a tax paid by homebuyers in England and Northern Ireland, based on the value of the property they are buying. The government has announced a permanent change to how the tax works, with the threshold at which buyers have to pay the 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 value of the property above that 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 value of the home from £250,001. The portion 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 rates of 12%.
The level at which first-time buyers have to pay stamp duty will rise from £300,000 to £425,000 in a move to increase home ownership. Under the plans, the first-time buyer relief will be applicable to properties worth up to £625,000, compared with the current £500,000.
A similar tax is paid in Scotland and Wales, but the rules and thresholds are different. In Scotland it is called land and buildings transaction tax, and is not payable on the first £145,000 of a property’s value.
Meanwhile, in Wales, the fee is called the land transaction tax, which is payable on properties above the value ofRead more on theguardian.com