Stamp duty cut calculator: How much will you pay after the mini-Budget?

A stamp duty cut was announced today by Chancellor Kwasi Kwarteng in his mini-Budget but home buyers hoping for a major overhaul will have been left disappointed.

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

For someone buying a £270,000 average home this will mean that their bill is reduced from £3,500 to £1,000.

First-time buyers will see their exemption level raised from £300,000 to £425,000 and pay no stamp duty up to that level – saving them a maximum £6,250.

The move in the so-called mini-Budget is a cut to one of Britain’s least favourite taxes that has a far greater impact on some buyers than others.

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

But the mini-Budget permanent cut to stamp duty so nothing is paid up to £250,000 will save people far less than Rishi Sunak’s previous stamp duty holiday, which removed the tax up to £500,000.

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

Band Stamp duty land tax rate Additional rate for landlords / second homes
First-time buyers pay 0% to £425,000 then normal rates apply
£0 – £250k 0% 3%
£250,001 – £925k 5% 8%
£925,001 – £1.5m 10% 13%
£1.5m + 12% 15%
* No stamp duty is paid on property transactions costing less than £40,000 as these are considered low value and not reported to HMRC
Band Stamp duty land tax rate Additional rate for landlords / second homes
First-time buyers pay 0% to £300,000 then normal rates apply
£0 – £125k 0% 3%
£125,001 – £250k 2% 5%
£250,001 – £925k 5% 8%
£925,001 – £1.5m 10% 13%
£1.5m + 12% 15%
* No stamp duty is paid on property transactions costing less than £40,000 as these are considered low value and not reported to HMRC

How much stamp duty would you pay now?

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

£350,000 home: £5,000 – saving £2,500

£450,000 home: £10,000 – saving £2,500

£500,000 home: £12,500 – saving £2,500

£750,000 home: £25,000 – saving £2,500

£1,000,000 home: £41,250 – saving £2,500

A permanent cut to stamp duty has been made in Kwasi Kwarteng’s mini-Budget but it will only save buyers a maximum of £2,500

How stamp duty works

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

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

Previously, stamp duty kicked in above a threshold of £125,000 at 2 per cent and then stepped up 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 until the 10 per cent threshold at £925,000.

The last major permanent stamp duty reform by George Osborne saw bills eased for some home buyers further down the price ladder and cliff edges removed, but higher charges for those buying expensive homes.

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

In April 2016, stamp duty on buy-to-let and other additional properties was reformed, with the addition of a new 3 per cent surcharge on all rates. This will remain under the new higher threshold system.

‘We missed out on the savings’

Candice Gray, 25, has missed out on yesterday’s stamp duty cut.

The textile designer and her partner Andrew Willcocks, 25, bought their first home for £350,000 in Oxfordshire ten months ago.

But the couple, who paid around £5,000 in tax for the purchase, praised the announcement as a step in the right direction for young people struggling to get on the property ladder.

Miss Gray said: ‘When I found out, I told my boyfriend and he said ‘Oh gosh’ because we could have saved some money.

‘But also I think if we move in a few years, we might benefit. Even if it is a few thousand pounds, that is quite a lot for some people. That could go toward the estate agent fees.

‘It makes quite a difference, depending on where you live. In Oxfordshire prices are pretty much always going to be over £300,000.’

Jason Tebb, of property website, said: ‘First-time buyers are the lifeblood of the housing market so targeting them in particular with assistance that will help them on to the ladder is particularly welcome.’

Sarah Coles, senior personal finance analyst at Hargreaves Lansdown, added: ‘Higher mortgage rates and higher property prices form a toxic cocktail that risks killing off demand.

‘For buyers facing forking out thousands of pounds right now, the stamp duty cut is a welcome change.’

But some experts warned the move would not address the main problem with England’s housing market – a lack of supply – and so could simply drive prices still further out of reach for the young.

Rachael Griffin, tax and financial planning expert at Quilter, said: ‘We only need to look back a matter of months to see what a transformational impact stamp duty holiday has on the market.

‘However, more demand also means higher prices unless more stock is built and this will spell bad news for many.’

Rightmove said the increase in stamp duty thresholds would exempt one in three homes on the market in England from the charge, up from just 7 per cent.

Industry figures welcomed the fact the move would come into force immediately and be permanent, unlike the temporary stamp duty holiday introduced during the Covid era that led to scrambles to complete sales before the deadline.

Andrew Montlake, managing director of mortgage brokers Coreco, said: ‘This will indeed help many first-time buyers who have agreed prices now, but we need to be careful that, as usually happens, house prices don’t simply rise further to eat up any potential savings and push homes out of reach for many more, especially at a time of higher interest rates.’

Details published in the Chancellor’s ‘Growth Plan’ show that the reform will cost the Treasury £795million this year, rising to £1.6billion in 2026-27.

Best mortgage rates and how to find them

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

If you are looking to buy your first home, move or remortgage, or are a buy-to-let landlord, it’s 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 fee-free broker L&C.

Our mortgage calculator powered by L&C can let you filter deals to see which ones suit your home’s value and level of deposit.

You can also compare different mortgage fixed rate lengths, from two-year fixes, to five-year fixes and ten-year fixes, with monthly and total costs shown.

Use the tool at the link below to compare the best deals, factoring in both fees and rates. You can also start an application online in your own time and save it as you go along.

> Compare the best mortgage deals available now

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