The Stamp Duty Land Tax (SDLT) holiday that was temporarily introduced on residential property to help homebuyers and to boost the UK property market during the COVID-19 pandemic ended in September 2021. After a gradual return between July and September, it finally reverted to the pre-holiday rates from 1 October 2021.What are these rates now and how much a home buyer will have to pay if purchasing a home in 2022?
Home buyers purchasing a property or a land before 1 July 2021 did not pay the Stamp Duty if the value of the purchase was below £500,000. Not only did it mean that a huge number of people paid zero tax, those looking for a more expensive home than the £500,000 were also significantly better off. This holiday gave the majority of potential home buyers more confident about buying, selling and renovating, which in turn supported jobs and drove economic growth.
Many people used Stamp Duty Holiday to their advantage. When leading property agents expected the property market to collapse, it flourished with more houses being listed on the market. Buyers discovered off market properties. Lots of property renovations have been made to attract these buyers.
Does it mean that having gone to the pre-holiday rates, the Stamp Duty Tax has slowed down the dynamics of the property market? We don’t think so. It is as busy as usual and in some areas, as a matter of fact, it is busier than before the pandemic.
So, what are the current Stamp Duty Tax rates? If the property you are buying is your main home in England and Northern Ireland, the rates are as follows:
- 0% for the properties up to £125,000;
- 2% for the properties from £125,000 to £250,000;
- 5% for the properties from £250,000 to £925,000;
- 10% for the properties from £925,000 to £1,5 million;
- 12% for the properties above £1,5 million;
It is absolutely worth mentioning that you will have to pay extra 3% on top of the Stamp Duty Tax for every additional residential property, and there are different rules and rates if you are buying a shared ownership property.
This of course is putting an extra pressure for those who are looking to buy a new home adding to the stress of constantly rising living costs. Are there any measures that might relieve this pressure? Good news – yes, there are! You will not have to pay the Stamp Duty if you meet some certain criteria, such as:
- first time home buyers in England or Northern Ireland buying a property that costs less than £300,000.
- you are buying a property which value is below the stamp duty threshold, which is currently £125,000.
- you are transferring the deeds of your home to someone.
If you are in Scotland, the tax you will have to pay is called the Land and Buildings Transaction Tax (LBTT). The Stamp Duty Holiday in Scotland ended on 31 March 2021. Since then, the following rates apply over the first £145,000:
- 2% on the value of the property between £145,000 and £250,000
- 5% on the part between £250,000 and £325,000
- 10% on the part from £325,000 to £750,000
- 12% on any value over £750,000
To buy a single property you do not have to pay any tax on the first £145,000. First time buyers in Scotland do not pay stamp duty on the first £175,000.
In Wales, the tax you will be paying when purchasing a property or land is called the Land Transaction Tax (LTT). The stamp duty in Wales ended on 30 June 2021. After that, the following Stamp Duty rates apply over £180,000:
- 3.5% between £180,000 and £250,000
- 5% on the part between £250,000 and £400,000
- 7.5% on the part between £400,000 and £750,000
- 10% within the next band up to £1.5 million
- 12% over £1.5 million
LTT is usually exempt on the first £180,000 of the property. And there is not currently any relief for first-time buyers in Wales. The idea is that the higher tax-free threshold of £180,000 should make most first time buys tax-free.
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