In one of the most significant tax-cutting budgets for many generations, Kwarteng announced that the threshold at which buyers would pay stamp duty on homes in England and Northern Ireland would be increased, thereby reducing the amount of tax owed when purchasing a home. The Chancellor said this would remove around 200,000 people from paying stamp duty altogether.
The threshold at which buyers start to pay stamp duty – known as the nil-rate tax threshold – was increased from £125,000 to £250,000.
Meanwhile, the nil-rate threshold for first-time buyers was increased from £300,000 to £425,000, while the maximum amount that an individual can pay while remaining eligible for first-time buyers’ relief rose to £625,000.
The Government said the measure means that all individuals buying residential property on or after 23 September 2022 will pay less or no stamp duty.
The cut applies to additional purchasers (including landlords), although the extra 3% surcharge on second homes remains. It’s been predicted that landlords will save around £2,500 when purchasing a new home under the new rules, although some have said this won’t be enough incentive to keep landlords in the market. Others have suggested the approach by Liz Truss and her Chancellor could impact the viability of buy-to-let, rendering the stamp duty savings relatively meaningless.
There has been much debate about the merits or otherwise of the stamp duty cut since the announcement, but this article does an excellent job of setting out its possible impact on the housing market.
Landlords are likely to welcome any tax savings they can get, given the tax disincentives they have faced in recent years. In contrast, tenants who have aspirations of buying will potentially be able to buy a higher-priced home without facing any stamp duty. Letting agents, meanwhile, could find they have more business if the cut incentivises more landlords to invest or grow their portfolios.