As part of the government’s Growth Plan, the Chancellor announced that the nil-rate band for stamp duty land tax (SDLT) on residential property purchases in England and Northern Ireland would be doubled from £125,000 to £250,000. The new nil-rate band applies for purchases with an effective date on or after 23 September.
This change effectively eradicates the 2% SDLT band that previously applied for the proportion of a house price between £125,000 and £250,000. This will deliver a tax saving of £2,500 for any house purchases where the price exceeds £250,000. The same saving will also apply to a purchase of an additional dwelling that is subject to the 3% higher rate of SDLT.
Where SDLT is due on rent for a leasehold property, the nil rate threshold is also doubled from £125,000 to £250,000.
As SDLT is devolved in Scotland and Wales, the Scottish and Welsh Governments will receive funding through the agreed fiscal framework to allocate as they see fit. It is not yet known whether the Scottish and Welsh Governments will use the funding to amend their land tax rates to reflect the changes to SDLT in England and Northern Ireland. Past experience suggests that they will make some changes.
While the government’s aim is to make home ownership affordable, many commentators anticipate that the lack of houses currently on the market may mean that boosting demand could fuel house prices, putting home ownership further out of reach for first-time buyers.
Read more:Stamp Duty Land Tax Reduction — Threshold Changes
Stamp Duty Land Tax Factsheet
ICAEW Know-How from the Tax Faculty
This guidance is created by the Tax Faculty, recognised internationally as a leading authority and source of expertise on taxation. The Faculty is the voice of tax for ICAEW, responsible for all submissions to the tax authorities. Join the Faculty for expert guidance and support enabling you to provide the best advice on tax to your clients or business.
More from the Tax Faculty
Stay up to date with the latest developments in tax by signing up to the Tax Faculty's weekly enewsletter
Comprehensive support for Tax practitioners each month from the Tax Faculty and expert contributors.
Expert advice from the Tax Faculty's technical managers on all the developments in tax policy and practice.