Stamp Duty Reduction Calculator: How Much Will You Pay After the Mini-Budget?

Chancellor Kwasi Kwarteng announced a stamp duty cut in his mini-budget, but homebuyers hoping for a major overhaul will have been disappointed.

The threshold at which stamp duty takes effect will immediately and permanently double from £125,000 to £250,000, but the rates will not change, meaning the maximum savings is £2,500.

For someone buying an average £270,000 house, this will mean their bill will drop from £3,500 to £1,000.

First-time buyers will see their exemption level increased from £300,000 to £425,000 and will not pay stamp duty up to that level, saving them £6,250 if they buy a £4,250,000 house.

The move in the so-called mini-budget is a cut to one of Britain’s least favorite taxes that has a much bigger impact on some shoppers than others.

While first-time buyers get an exemption from stamp duty and those buying a £270,000 house in the average UK face bills of around £3,500, people buying family homes in more expensive areas can face bills in the tens of thousands of pounds.

But the permanent mini-budget cut to stamp duty, so nothing is paid up to £250,000, will save people much less than Rishi Sunak’s previous stamp duty waiver, which removed the tax up to £500,000.

With the Mini Budget stamp duty cut, buyers will save up to £2,500, while the Sunak stamp duty holiday could save up to £15,000.

STAMP DUTY RATES UNDER THE NEW SYSTEM
Band Stamp duty land tax rate Additional fee for owners/second residence
First time buyers pay 0% to £425,000 then normal fees apply
£0 – £250k 0% 3%
£250,001 – £925k 5% 8%
£925,001 – £1.5 million 10% 13%
£1.5 million + 12% fifteen%
* Stamp Duty is not payable on property transactions costing less than £40,000 as they are considered low value and are not reported to HMRC
STAMP DUTY RATES UNDER THE OLD SYSTEM
Band Stamp duty land tax rate Additional fee for owners/second residence
First time buyers pay 0% to £300,000 then normal fees apply
£0 – £125k 0% 3%
£125,001 – £250k two% 5%
£250,001 – £925k 5% 8%
£925,001 – £1.5 million 10% 13%
£1.5 million + 12% fifteen%
* Stamp Duty is not payable on property transactions costing less than £40,000 as they are considered low value and are not reported to HMRC

How much stamp duty would you pay now?

Average home of £270,000: £1,000 – saving £2,500

£350,000 household: £5,000 – saving £2,500

£450,000 house: £10,000 – saving £2,500

£500,000 house: £12,500 – saving £2,500

£750,000 house: £25,000 – saving £2,500

£1,000,000 household: £41,250 – saving £2,500

A permanent cut to stamp duty has been made on the Kwasi Kwarteng mini-Budget, but it will only save buyers a maximum of £2,500

How stamp duty works

Stamp duty is charged on the purchase price of a house and levels out at different rates above the thresholds.

First-time buyers had a stamp duty exemption of up to £300,000, which has now been raised to £425,000. They have a maximum purchase price limit above which the exemption does not apply and this was also raised to £625,000.

Previously, stamp duty came in above a threshold of £125,000 at 2 per cent and then increased to 5 per cent above £250,000.

Now the first £250,000 is tax free and amounts above are charged at 5 per cent up to the 10 per cent threshold at £925,000.

For first time buyers, the first £425,000 is tax free and then the 5 per cent rate applies. If they buy a property that costs more than £625,000, they lose their exemption.

George Osborne’s last big permanent stamp duty reform lowered bills for some homebuyers further down the price scale and removed cliff edges, but increased charges for those buying expensive homes.

Stamp duty bills remain substantial for buyers under the Kwasi Kwarteng cut, but will see a £2,500 reduction.

In April 2016, the stamp duty on buy-to-let and other additional properties was reformed, with the addition of a new 3 percent surcharge on all fees. This will remain under the new higher threshold system. It means stamp duty rates for buy to let and second homes start at 3 per cent up to £250,000, increasing up to 8 per cent above this.

The best mortgage rates and how to find them

Mortgage rates have risen substantially as the Bank of England base rate has risen rapidly.

If you’re thinking about buying your first home, moving or remortgaging, or are a buy-to-let landlord, it’s important to get good, independent mortgage advice from a broker who can help you find the best deal.

To help our readers find the best mortgage, This is Money has partnered with independent broker L&C.

Our L&C-powered mortgage calculator can allow you to filter offers to see which ones best match your home value and deposit level.

You can also compare different fixed-rate mortgage durations, from two-year arrangements to five-year arrangements to ten-year arrangements, with monthly and total costs displayed.

Use the tool at the link below to compare the best deals, taking both fees and rates into account. You can also start an online application on your own time and save it as you go.

> Compare the best mortgage deals available now

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