Several key changes to Stamp Duty Land Tax (SDLT) were announced by Chancellor Kwasi Kwarteng in the 2022 Mini-Budget on 23 September.

As well as supporting businesses, the Government recognised the tax burden, especially in the current economic climate, placed on individuals when it comes to acquiring a home (which is often their principal asset). Therefore, the Chancellor announced a range of changes to SDLT to promote the Government’s commitment to the housing market. The threshold from when SDLT becomes payable (England and Northern Ireland) has been doubled from £125,000 to £250,000 with immediate effect as of 23 September 2022. This means that in England and Northern Ireland, from today a property acquired for less than £250,000 will suffer no SDLT unless it’s the purchase of a second home.

The Government has gone further to help first time buyers, who are arguably facing the largest financial strain when it comes to acquiring a property. On this basis, the Government has increased the threshold on which first time buyers begin to pay SDLT from £300,000 to £425,000 and increased the maximum property value on which relief be claimed from £500,000 to £625,000.

It is important to remember that SDLT applies to properties in England and Northern Ireland only. Scotland has its own devolved regime (LBTT), which although operates in a similar manner, has its own rates and bandings. It has been confirmed that the Scottish and Welsh Governments will receive funding through the agreed fiscal framework which they can use as they see fit, which may lead to further changes to LBTT in coming months. To put this into perspective, we have set out examples below.

SDLT (England and Northern Ireland)

LBTT (Scotland)

First Time Buyer’s Relief

Effective immediately, the threshold at which first-time buyers begin to pay residential SDLT will increase from £300,000 to £425,000. The maximum value of a property on which First Time Buyer's Relief can be claimed will also increase from £500,000 to £625,000. This will widen the difference between the tax payable on the purchase of a new residential property in England versus the tax payable in Scotland, especially on more expensive properties. This is illustrated below:

• First time buyer threshold in England: £425,000                            
• First time buyer threshold in Scotland: £175,000

Examples

Non-first time buyer purchasing a home at £350,000:                             

England and Northern Ireland – SDLT of £5,000 is payable.                      
Scotland – LBTT of £8,350 is payable.

First time buyer purchasing a home at £350,000:                                     

England and Northern Ireland – No SDLT applicable.                                 
Scotland – LBTT of £7,750 is payable.

Amounts payable based on average house prices:

Average house price in England £312,000*:

SDLT of £3,100* (down from £5,600)

Average house price in Scotland £188,000**:

LBTT of £860

The LBTT figures above are based on current rates and bandings before any potential future changes by the Scottish Government.

Find out more

For more information or to discuss how this impacts your circumstances, don't hesitate to get in touch with me at Philip.Jamieson@jcca.co.uk, Craig Burnie, or your usual Johnston Carmichael contact.

You can read our full 'mini-budget' summary, here.

*Source – HM Treasury Stamp Duty Land Tax Factsheet 23 September 2022

** Source – ONS UK House Price Index: April 2022