STAMP duty can be hard to understand and add thousands of pounds to the cost of your move.
But Chancellor Kwasi Kwarteng announced plans to cut it in September's mini-budget in a bid to boost economic growth.
It's important to know what the changes mean for you so below we explain all.
What is stamp duty?
Stamp duty land tax (SDLT) is a lump sum payment you have to make when purchasing property over a certain threshold.
You pay the tax when you:
- buy a freehold property
- buy a new or existing leasehold
- buy a property through a shared ownership scheme
- are transferred land or property in exchange for payment, for example you take on a mortgage or buy a share in a house
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The rate a buyer has to spend depends on the price and type of property.
Who has to pay it?
From September 23, 2022, first time buyers do not have to pay the tax on homes costing less than £425,000. They only have to pay it on properties costing more than this.
This figure was previously £300,000 but was changed by Chancellor Kwasi Kwarteng.
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The maximum value of a property on which first-time buyer's relief can be claimed also increased from £500,000 to £625,000.
Under the previous system, no stamp duty was paid on the first £125,000 of all property purchases but the government has doubled that to £250,000.
Back in 2020 the Treasury temporarily raised the stamp duty threshold from £125,000 to £500,000 for sales of homes in England and Northern Ireland.
Have the rules changed?
HMRC are now discussing potential changes to the SDLT rules for mixed use property purchases.
This can mean residential and non-residential properties, for example a country house with land used for grazing, or a large scale building used for flats and retail.
Last September, the government stopped what was called stamp duty holiday.
The aim was to give buyers a break and to buzz some energy back into the property market.
What happens now the stamp duty holiday has ended?
After 30 September 2021, stamp duty went back to its previous rules.
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But from September 23 have to pay stamp duty on anything over £250,000 of the agreed sale price.
It’s a tiered system, meaning you don’t pay the full rate on the entire property price, just the amount that dips into each tier.
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