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

Chancellor Kwasi Kwarteng announced a stamp duty cut in his mini-budget today, but homebuyers hoping for a major overhaul have been disappointed.

The threshold at which stamp duty kicks in is immediately and permanently doubled from £125,000 to £250,000, but the rates don’t change, meaning the maximum saving is £2,500.

For someone buying an average house worth £270,000, that means their bill is reduced from £3,500 to £1,000.

For first-time buyers, the exemption limit is raised from £300,000 to £425,000 and they pay no stamp duty up to that level – saving a maximum of £6,250.

The move in what is known as the mini-budget is a cut in one of Britain’s most unpopular taxes, one that has a far bigger impact on some buyers than others.

While first-time buyers get a stamp duty exemption and those buying an average UK home of £270,000 face bills of around £3,500, people buying single-family homes in more expensive areas can face bills in the tens of thousands of pounds.

But the Mini-Budget’s permanent stamp duty cut, leaving up to £250,000 unpaid, will save people far less than Rishi Sunak’s previous stamp duty holiday, which saw the tax eliminated up to £500,000.

Under the mini-budget stamp duty cut, buyers could save a maximum of £2,500, while under Sunak’s stamp duty holiday they could save a maximum of £15,000.

STAMP SETS ACCORDING TO THE NEW SYSTEM
tape Basic rate of stamp duty Supplement for landlords / second homes
First-time buyers pay 0% up to £425,000, then normal prices apply
£0 – £250,000 0% 3%
£250,001 – £925,000 5% 8th%
£925,001 – £1.5m 10% 13%
£1.5m+ 12% fifteen%
* No stamp duty is paid on property transactions costing less than £40,000 as these are considered low value and are not reported to HMRC
STAMP SETS ACCORDING TO THE OLD SYSTEM
tape Basic rate of stamp duty Supplement for landlords / second homes
First-time buyers pay 0% up to £300,000, then normal prices apply
£0-£125,000 0% 3%
£125,001 – £250,000 2% 5%
£250,001 – £925,000 5% 8th%
£925,001 – £1.5m 10% 13%
£1.5m+ 12% fifteen%
* No stamp duty is paid on property transactions costing less than £40,000 as these are considered low value and are not reported to HMRC

How Much Stamp Duty Would You Pay Now?

Average £270,000 home: £1,000 – £2,500 saved

£350,000 Home: £5,000 – £2,500 saved

£450,000 Home: £10,000 – £2,500 saved

£500,000 Home: £12,500 – £2,500 saved

£750,000 Home: £25,000 – £2,500 saved

£1,000,000 house: £41,250 – £2,500 saved

A permanent stamp duty reduction has been introduced in Kwasi Kwarteng's mini-budget, but this will only save buyers a maximum of £2,500

A permanent stamp duty reduction has been introduced in Kwasi Kwarteng’s mini-budget, but this will only save buyers a maximum of £2,500

This is how stamp duty works

Stamp duty is levied on the purchase price of a home and leveled at different rates above the thresholds.

First-time buyers had a stamp duty exemption of up to £300,000, which has now been raised to £425,000.

Previously, stamp duty kicked in at 2 per cent above a threshold of £125,000 and then rose to 5 per cent above £250,000

Now the first £250,000 is tax free and amounts above that are charged at 5 per cent up to the 10 per cent threshold of £925,000.

George Osborne’s last major permanent stamp duty reform saw bills eased and cliffs removed for some homebuyers further down the price ladder, but higher fees for those buying expensive homes.

Stamp duty bills still remain substantial for buyers under Kwasi Kwarteng’s cut, but they will see a £2,500 reduction.

In April 2016, stamp duty on rental housing and other ancillary properties was reformed, adding a new 3 per cent surcharge to all rates. This remains under the new system with higher thresholds.

The best mortgage rates and how to find them

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Mortgage rates have risen significantly as the Bank of England’s base rate has risen rapidly.

If you are buying your first home, looking to relocate or get a mortgage, or are a landlord buying to rent, it is 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 toll-free broker L&C.

Our mortgage calculator, powered by L&C, allows you to filter offers to see which match the value of your home and the amount of security deposit.

You can also compare different fixed-rate mortgage terms, from two-year terms to five-year terms to ten-year terms, showing the monthly cost and the total cost.

Use the tool at the link below to compare the best deals, taking into account both fees and tariffs. You can also start an application online and save it in between.

> Compare the best mortgage offers now

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Emma Colton

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