top of page
United Kingdom Stamp Duty
2022 stamp duty cuts explained

Liz Truss’s newly appointed chancellor, Kwasi Kwarteng, announced a stamp duty cut on Friday as part of his mini-budget. The cuts will reduce the overall stamp duty bill for buyers and investors. But by how much?

What is stamp duty?

Stamp Duty Land Tax (SDLT) is a tax tied to property and land.

You may have to pay SDLT if you buy residential property or land in England or Northern Ireland. The tax is slightly different when purchasing property in other parts of the UK.

As stated on the UK government website, stamp duty applies to the following:

  • The purchase of a freehold property

  • The purchase of a new or existing leasehold property

  • A property you buy through a shared ownership scheme

  • Land and property transfers

When do I pay stamp duty?

f you are required to pay SDLT, you will have to do so within a short time frame.

You will need to pay any stamp duty owed within 14 days of completion. Your solicitor will take care of the payment to HMRC as part of their process.

Once they have filed and completed your stamp duty payment, they will add it to your fees.

Who pays stamp duty?

You will pay SDLT if you buy a property over the threshold.

The threshold for residential properties was £125,000, otherwise known as the nil-rate band. However, this has now been increased to £250,000. So, any property below the threshold is not subject to SDLT. Based on the price of a property in the UK, you will unlikely avoid paying SDLT.

According to the latest ONS figures, the average price of a property in the UK is £292,000.

However, not everyone will need to pay stamp duty. Those looking to buy their first house can take advantage of reliefs and exemptions.

First-time buyers did not pay stamp duty on the first £300,000 of the property’s value. This has now increased to £425,000.

After that, a first-time buyer will now pay SDLT at a reduced rate of 5% on the value between £425,000 – £625,000.

SDLT also applies when purchasing a second home that costs more than £40,000 in England or Northern Ireland.

Examples of second homes include:

  • An additional property

  • A buy-to-let property

  • Holiday home

2022 stamp duty cuts explained

The big takeaway from the chancellor’s announcement is the increase in the SDLT threshold.

Previously, the nil-rate band was £125,000. That has doubled to £250,000. Here’s how your bill is worked out. SDLT is paid on a sliding scale. In other words, the higher the property price, the more you will pay. Stamp duty bands are used to calculate the total amount due. The current stamp duty rates range from 0-12%.

You will pay an extra 3% on top of the standard stamp duty rates if you buy a home over £40,000 that will not be your primary residence. This includes additional properties or a buy-to-let rental property.

Each portion of the property value is taxed based on the corresponding stamp duty band. So, buying a property for over £1,500,000 doesn’t mean you pay 12% of the total value. Only the portion of the value that falls within that band is taxed at 12%, not all of it.

Here’s an example:

  • House price: £500,000

  • Band 1 £0-£250,000: No tax is paid at this band. Stamp duty paid: £0

  • Band 2 £250,001-£925,000: The rest of the property value (£250,001-£500,000) falls within this band where SDLT is 5%. Stamp duty paid: £12,500

  • Total stamp duty paid: £12,500

  • Total purchase price: £512,500 (£500,000+£12,500 SDLT)

Be aware that overseas buyers face paying an additional 2% on top of the existing surcharge rates. This could result in foreign investors paying up to 17%.

For more information on the rates of stamp duty for non-UK residents, please visit the UK government’s website.

bottom of page