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Recent SDLT changes

February 26, 2023

In his recent mini-Budget, the then Chancellor announced a number of stamp duty land tax (SDLT) changes. What are the changes and how will they affect the SDLT that you will pay on your property purchase?

Residential property

SDLT on residential property is payable at the residential rates where the consideration exceeds the residential threshold. A supplement of 3% applies where the purchase is of a second or subsequent residential property costing £40,000 or more which is not an exchange of your main residence.

The SDLT residential duty threshold was doubled from £125,000 to £250,000 with effect for completions on or after 23 September. The rates and thresholds applying from that date are as shown in the table below. SDLT is calculated on each slice of the consideration at the rate applying to that band.

Consideration	First property or main residence exchange	Additional properties costing £40,000 or more
Up to £250,000	0%	3%
The next £675,000 (from £250,001 to £925,000)	5%	8%
The next £575,000 (from £925,001 to £1.5 million)	10%	13%
The remaining amount (above £1.5 million)	12%	15%

From 1 October 2021 to 22 September 2022, the residential threshold was £125,000 and SDLT was payable at the rate of 2% (5% for additional properties) on consideration between £125,001 and £250,000. The increase in the SDLT residential threshold reduces the SDLT payable on a property costing at least £250,000 by £2,500 (£125,000 @ 2%).

First-time buyers

First-time buyers benefit from a higher residential SDLT threshold. This was increased from £300,000 to £425,000 with effect from 23 September 2022. The first-time buyer threshold only applies if the property costs £625,000 or less (£500,000 prior to 23 September 2022).

Consequently, from 23 September 2022, a first-time buyer will pay no SDLT if they purchase a residential property for £425,000 or less. If the purchase price is between £425,000 and £625,000, they will pay no SDLT on the first £425,000 and SDLT at 5% on the excess over £425,000. For example, a first-time buyer purchasing a property costing £500,000 will pay SDLT of £3,750 ((£500,000 - £425,000) @ 5%). The increase in the threshold will mean that a purchaser who is eligible for the first-time buyer threshold will pay £6,250 less in SDLT than previously on a residential property costing at least £425,000 (£125,000 @ 5%) and less than the first-time buyer ceiling.

If the first-time buyer pays more than £625,000 for their property, the first-time buyer threshold does not apply; the normal residential threshold of £250,000 applies instead. SDLT is calculated at the normal residential rates as shown in the above table.

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