From 1 April, changes will be made to stamp duty, meaning more first-time buyers will be forced to pay it and other home movers face a higher bill.
So what is it, what’s changing and what impact will it have? Here’s everything you need to know.
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What is stamp duty?
Put simply, it is a tax you pay when you purchase a property over a certain price in England and Northern Ireland.
The amount you pay is calculated based on the purchase price of your home.
When you start paying stamp duty varies depending on whether you are a first-time buyer or not.
How much is it at the moment?
Stamp duty is currently operating at reduced rates – the last Tory government temporarily implemented this and it has always been due to end.
The lower amount means buyers do not have to pay any stamp duty on the first £250,000 of the purchase price – meaning all homes bought under this amount are exempt.
They then have to pay 5% on the portion of the property price between £250,001 and £925,000, and 10% on anything between £925,001 and £1.5m.
Anything over that is charged at 12%.
Here’s an example:
If you buy a house for £295,000. The stamp duty you owe will be calculated as follows:
- 0% on the first £250,000 = £0
- 5% on the final £45,000 = £2,250
- Total amount = £2,250
First-time buyers do not have to pay stamp duty on purchases up to £425,000, and then pay 5% on the portion of the price from £425,001 to £625,000.
Anything over that is charged at the standard rates of stamp duty, as explained above.
What is changing?
From 1 April, the threshold at which first-time buyers start paying the tax will return to previous levels, dropping to £300,000 – meaning many more will be liable.
The rate is then 5% on the portion of the house price from £300,001 to £500,000. There’s no discount offered on the portion over £500,000.
Here’s an example:
You are a first-time buyer and purchase a property for £500,000. The stamp duty you owe will be…
