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Stamp duty cut calculator: How much will you pay after the mini-Budget?

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A stamp duty cut was announced today by Chancellor Kwasi Kwarteng in his mini-Budget but home buyers hoping for a serious overhaul may have been left upset. 

The edge at which stamp duty kicks in shall be immediately and permanently doubled from £125,000 to £250,000, however the rates won’t change meaning the utmost saving is £2,500.

For somebody buying a £270,000 average home this can mean that their bill is reduced from £3,500 to £1,000. 

First-time buyers will see their exemption level raised from £300,000 to £425,000 and pay no stamp duty as much as that level – saving them a maximum £6,250.

The move within the so-called mini-Budget is a cut to one in every of Britain’s least favourite taxes that has a far greater impact on some buyers than others.

While first-time buyers get a stamp duty exemption and people buying a median UK £270,000 home face bills of about £3,500, people buying family homes in costlier areas can face bills of tens of 1000’s of kilos.

However the mini-Budget everlasting cut to stamp duty so nothing is paid as much as £250,000 will save people far lower than Rishi Sunak’s previous stamp duty holiday, which removed the tax as much as £500,000.

Under the mini-Budget stamp duty cut buyers will save a maximum of £2,500, whereas under Sunak’s stamp duty holiday they may save a maximum of £15,000. 

STAMP DUTY RATES UNDER THE NEW SYSTEM

BandStamp duty land tax rate Additional rate for landlords / second homes
First-time buyers pay 0% to £425,000 then normal rates apply 
£0 – £250k0%3%
£250,001 – £925k5%8%
£925,001 – £1.5m10%13%
£1.5m +12%15%
* No stamp duty is paid on property transactions costing lower than £40,000 as these are considered low value and never reported to HMRC 
STAMP DUTY RATES UNDER THE OLD SYSTEM

BandStamp duty land tax rate Additional rate for landlords / second homes 
First-time buyers pay 0% to £300,000 then normal rates apply 
£0 – £125k0%3%
£125,001 – £250k2%5%
£250,001 – £925k5%8%
£925,001 – £1.5m10%13%
£1.5m +12%15%
* No stamp duty is paid on property transactions costing lower than £40,000 as these are considered low value and never reported to HMRC 

How much stamp duty would you pay now?

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

£350,000 home: £5,000 – saving £2,500

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

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

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

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

A everlasting cut to stamp duty has been made in Kwasi Kwarteng’s mini-Budget but it’ll only save buyers a maximum of £2,500

How stamp duty works

Stamp duty is charged on the acquisition price of a house and levelled at different rates above thresholds.

First-time buyers had a stamp duty exemption as much as £300,000, which has now been raised to £425,000.

Previously, stamp duty kicked in above a threshold of £125,000 at 2 per cent after which stepped as much as 5 per cent above £250,000

Now the primary £250,000 is tax-free and amounts above which might be charged at 5 per cent until the ten per cent threshold at £925,000. 

The last major everlasting stamp duty reform by George Osborne saw bills eased for some home buyers further down the value ladder and cliff edges removed, but higher charges for those buying expensive homes.

Stamp duty bills still remain substantial for those buyers under Kwasi Kwarteng’s cut, but they may see a discount of £2,500.

In April 2016, stamp duty on buy-to-let and other additional properties was reformed, with the addition of a recent 3 per cent surcharge on all rates. This may remain under the brand new higher threshold system.

‘We missed out on the savings’ 

Candice Gray, 25, has missed out on yesterday’s stamp duty cut.

The textile designer and her partner Andrew Willcocks, 25, bought their first home for £350,000 in Oxfordshire ten months ago.

However the couple, who paid around £5,000 in tax for the acquisition, praised the announcement as a step in the correct direction for young people struggling to get on the property ladder.

Miss Gray said: ‘After I discovered, I told my boyfriend and he said ‘Oh gosh’ because we could have saved some money.

‘But in addition I feel if we move in a number of years, we would profit. Even whether it is a number of thousand kilos, that is sort of quite a bit for some people. That would go toward the estate agent fees.

‘It makes quite a difference, depending on where you reside. In Oxfordshire prices are just about at all times going to be over £300,000.’

Jason Tebb, of property website OnTheMarket.com, said: ‘First-time buyers are the lifeblood of the housing market so targeting them specifically with assistance that may help them on to the ladder is especially welcome.’

Sarah Coles, senior personal finance analyst at Hargreaves Lansdown, added: ‘Higher mortgage rates and better property prices form a toxic cocktail that risks killing off demand.

‘For buyers facing forking out 1000’s of kilos without delay, the stamp duty cut is a welcome change.’

But some experts warned the move wouldn’t address the major problem with England’s housing market – a scarcity of supply – and so could simply drive prices still further out of reach for the young.

Rachael Griffin, tax and financial planning expert at Quilter, said: ‘We only have to look back a matter of months to see what a transformational impact stamp duty holiday has available on the market.

‘Nevertheless, more demand also means higher prices unless more stock is built and this can spell bad news for a lot of.’

Rightmove said the rise in stamp duty thresholds would exempt one in three homes available on the market in England from the charge, up from just 7 per cent.

Industry figures welcomed the very fact the move would come into force immediately and be everlasting, unlike the temporary stamp duty holiday introduced through the Covid era that led to scrambles to finish sales before the deadline.

Andrew Montlake, managing director of mortgage brokers Coreco, said: ‘This may indeed help many first-time buyers who’ve agreed prices now, but we should be careful that, as often happens, house prices don’t simply rise further to eat up any potential savings and push homes out of reach for a lot of more, especially at a time of upper rates of interest.’

Details published within the Chancellor’s ‘Growth Plan’ show that the reform will cost the Treasury £795million this 12 months, rising to £1.6billion in 2026-27.

Best mortgage rates and the way to find them

Mortgage rates have risen substantially because the Bank of England’s base rate has climbed rapidly.

Should you wish to buy your first home, move or remortgage, or are a buy-to-let landlord, it is vital to get good independent mortgage advice from a broker who can assist you to find the very best deal. 

To assist our readers find the very best mortgage, That is Money has partnered with independent fee-free broker L&C.

Our mortgage calculator powered by L&C can allow you to filter deals to see which of them suit your own home’s value and level of deposit.

You can too compare different mortgage fixed rate lengths, from two-year fixes, to five-year fixes and ten-year fixes, with monthly and total costs shown.

Use the tool on the link below to match the very best deals, factoring in each fees and rates. You can too start an application online in your individual time and put it aside as you go along.

> Compare the very best mortgage deals available now

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