What are the Stamp Duty Changes in the Mini Budget 2022?

The chancellor, Kwasi Kwarteng, has today announced some changes in his ‘mini-budget’ including a reduction in the rate of stamp duty for some purchases. What are the stamp duty changes that have been announced? They are as follows:

• No stamp duty is payable on purchases under £250,000 (this was previously set at £125,000) and for the tranche of the purchase price under that level for purchases over that amount – there is a different rate for first time buyers**
• The next £675,000 (i.e. for properties up to £925,000) is charged at 5%
• The next £575,000 (i.e. the amount charged between £925,001 and £1.5m) is charged at 10%
• Amounts over £1.5m are charged at 12%

This means essentially that he has removed the 2% tranche for the purchase value between £125,000 and £250,000, which decreases the amount of stamp duty that is payable on properties above £250,000 by £2,500 (250,000 – 125,000 * 0.02). The other tranches remain as they were before and that is the only change.

The average house price in the UK in June 2022 was £286,397 so this reduction in stamp duty will impact a large number of house purchases and will help a lot of buyers in the mid range of property purchases as well as at the higher end.

** The rate for first time buyers is different – prior to 23rd September 2022 there was a 0% rate up to £300,000 and then a 5% rate from £300,000 to £500,000. This has now changed to:

• 0% up to the first £425,000
• 5% on the next £200,000 – i.e. up to £625,000

Note that if you are a first time buyer and your property purchase price is greater than £625,000 (£500,000 previously) then you are subject to the general rates (i.e. you don’t get the first time buyers discount).

The changes take effect immediately – i.e. from 23rd September 2022. Anyone who completes on a property purchase from this date onwards will be subject to the new stamp duty rates.

Stamp duty rates for second properties reflect the rates for main properties but with an additional 3% added, so stamp duty for additional properties will also be affected.

These are also permanent changes rather than the temporary ones that occurred in the last few years.