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.

First-time buyers previously benefitted from a nil-rate band of £300,000, where the value of the home was up to £500,000. The nil-rate threshold has been increased to £425,000 on homes up to a maximum value of £625,000. This means that the first £425,000 of the house price does not attract SDLT. Any excess between £425,000 and £625,000 is subject to 5% SDLT. First-time buyer relief is not available on properties over £625,000.

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