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

Foreign Minister Kwasi Kwarteng today 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 kicks in will be immediately and permanently doubled 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 home, 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 pay no stamp duty up to that level, saving them £6,250 if they buy a £4,250,000 home.

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 a stamp duty exemption and those buying a £270,000 home 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 mini-budget’s permanent cut to the stamp duty, so nothing is paid up to £250,000, will save people much less than Rishi Sunak’s previous stamp duty exemption, which eliminated the tax up to £500,000.

With the mini-budget stamp duty cut, shoppers will save up to £2,500, while with the Sunak stamp duty holiday they could save up to £15,000.

STAMP TAX RATES UNDER THE NEW SYSTEM
Band Land tax rate of stamp duty Additional fee for owners/second residence
First time buyers pay 0% to £425,000 then normal rates apply
£0 – £250k 0% 3%
£250,001 – £925k 5% 8%
£925,001 – £1.5 million 10% 13%
£1.5 million + 12% fifteen%
* No stamp duty is payable on property transactions costing less than £40,000 as they are considered low value and are not reported to HMRC
STAMP TAX RATES UNDER THE OLD SYSTEM
Band Land tax rate of stamp duty 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%
* No stamp duty is 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 £270,000 home: £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 stamp duty cut has been made at Kwasi Kwarteng's mini-Budget, but it will only save shoppers a maximum of £2,500

A permanent stamp duty cut has been made at Kwasi Kwarteng’s mini-Budget, but it will only save shoppers a maximum of £2,500

How does stamp duty work?

Stamp duty is levied on the purchase price of a home and is leveled at different rates above 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 has also been raised to £625,000.

Previously stamp duty came in above a threshold of £125,000 at 2 per cent and then rose 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 major 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 reduction of £2,500.

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 rates. 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, rising 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 of buying your first home, moving or remortgaging, or are a landlord buying to let, 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 mortgage calculator powered by L&C can allow you to filter offers to see which ones fit your home value and deposit level.

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

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

> Compare the best mortgage offers available now

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