The new Chancellor Kwasi Kwarteng has confirmed a permanent stamp duty cut in the mini-Budget announced this morning.
The government is reforming stamp duty by doubling the level at which people begin paying this from £125,000 to £250,000.
This government is also committed to helping first-time buyers get on the property ladder in two ways. Firstly, by increasing the level first-time buyers start paying stamp duty from £300,000 to £425,000.
In addition, the government is allowing first-time buyers to access the relief when they buy a property costing less than £625,000 rather than the current £500,000.
These measures will reduce stamp duty bills across the board for all movers by up to £2,500 with first-time buyers able to access up to £11,250 in relief.
The government says that growth is its top priority and by taking these measures will boost the property market, in turn helping businesses expand to help fuel the wider economy’s growth.
Doubling the nil-rate band will enable up to 29,000 more people to move home each year, in turn boosting household consumption, which will increase confidence in the economy and support thousands of businesses who rely on the property market. This includes, for example, estate agents, cleaners, builders, contractors, removals companies, plumbers, decorators and others.
This policy is a tax-cut for hard-working people and will allow them to keep more of the money they earn. This tax cut will boost household consumption, increase economic confidence and support jobs.
The government is committed to fiscal sustainability by ensuring the economy grows faster than our debts and keeping debt as a proportion of our economy on a downward path.
First-time buyers
For first-time buyer the expenses which come with buying a new home can be off-putting, to help them the government raising the amount they can spend on a new house without paying any stamp duty. They will now not pay it if their first home costs less than £425,000, an increase of £125,000 on the current threshold.
If though a first-time buyer does spend more than £425,000, they will now be entitled to relief – meaning they will pay 5% SDLT – up to £625,000, an increase of £125,000 from the current limit.
In addition to the Growth Plan’s stamp duty measures, The Lifetime ISA helps buyers save money. This is a long-term savings product intended to support younger people saving for their first home, or for later life to save up to £4,000 into their account each year until their 50th birthday, receiving a 25% government bonus on those savings. Since 2017, more than 118,0000 individuals have used these accounts to help fund their property purchase.
Since 2016, more than 1.1 million new dwellings have been built in England, increasing the supply of homes.
Since spring 2010, over 774,000 households have been helped to purchase a home through government-backed schemes including Help to Buy and Right to Buy.The government operates a range of relevant schemes which make home ownership more affordable. More detail on all of these schemes and others including Right to Buy and discounted sales is available on the government’s home ownership website. The website also contains details of eligibility requirements so that people can identify the scheme most appropriate to their needs.
Table of potential savings
| SDLT charge for standard home mover (£) | SDLT charge for standard home mover (£) | SDLT charge for first time buyer (£) | SDLT charge for first time buyer (£) | |||
| Price (£) | As at 22 Sep 2022 | As at 23 Sep 2022 | Saving (£) | As at 22 Sep 2022 | As at 23 Sep 2022 | Saving (£) |
| 200,000 | 1,500 | 0 | 1,500 | 0 | 0 | N/a |
| 400,000 | 10,000 | 7,500 | 2,500 | 5,000 | 0 | 5,000 |
| 600,000 | 20,000 | 17,500 | 2,500 | 20,000 | 8,750 | 11,250 |
| England (average house price based on July 2022 Land registry data) | 312,000 | 5600 | 3,100 | 2,500 | 600 | 0 | 600 |
| Property Value | Standard Residential Rates |
|---|---|
| £0 – £250,000 | 0% |
| £250,000 – £925,000 | 5% |
| £925,000 – £1,500,000 | 10% |
| £1,500,000+ | 12% |
This is a permanent measure and will apply only in England and Northern Ireland. Stamp duty is not charged in Scotland, instead home purchasers pay Land and Buildings Transaction Tax, with rates set by the Scottish government.
Text quoted from Property Industry Eye article: https://propertyindustryeye.com/eye-newsflash-stamp-duty-cut-to-save-homebuyers-thousands-of-pounds-full-details-announced/
Second property and overseas surcharges continue to apply.
Kwasi Kwarteng MP, flanked by the Prime Minister and Simon Clarke Secretary of State for Levelling Up, Housing and Communities, said that the planned National Insurance increase of 1.25% due to come into force on 6 November, has been reversed to help employers trying to keep pace with wage growth. Likewise, the planned increase in corporation tax from 19% to 25% next year has also been scrapped.
The basic rate of income tax will be cut to 19% in April 2023, one year earlier than planned.
Yesterday, UK interest rates were increased by 0.5% to 2.25% and earlier this week, the Secretary of State for Business, Energy & Industrial Strategy committed to cap energy prices for all businesses.
The Growth Plan for a New Era focuses on tax cuts as well as enterprise zones with preferable business and stamp duty rates with today’s announcement referencing areas of Tees Valley, West Midlands and Norfolk along with the intention to work with the devolved authorities to try to expand these benefits. (quoted from Propertymark https://www.propertymark.co.uk/)
The mini budget at a glance as quoted from www.bbc.co.uk
Income tax
- Cut in basic rate of income tax to 19% from April 2023
- Government estimates 31 million people getting £170 a year more
- Currently, people in England, Wales and Northern Ireland pay 20% on any annual earning between £12,571 to £50,270 – rates in Scotland are different
- 45% higher rate of income tax abolished for England, Wales and Northern Ireland taxpayers
- One single higher rate of income tax of 40% from April next year
National Insurance
- Reverse recent rise in National Insurance (NI) from 6 November
- Workers and employers have paid an extra 1.25p in the pound since April
- New Health and Social Care Levy to pay for the NHS will not be introduced
Corporation tax
- Cancel UK-wide rise in corporation tax which was due to increase from 19% to 25% in April 2023
Does cutting corporation tax always raise more money?
Benefits
- Rules around universal credit tightened, by reducing benefits if people don’t fulfil job search commitments
- Around 120,000 more people on Universal Credit to be asked to take steps to seek more work, or face having their benefits reduced
- Jobseekers over 50 to be given extra time with work coaches to help them return to job market
Work and investment
- IR35 rules – the rules which govern off-payroll working – to be simplified
- Annual investment allowance, the amount companies can invest tax free, remains at £1m indefinitely
- Regulations change so pensions funds can increase UK investments
- New and start-up companies able to raise up to £250,000 under scheme giving tax relief to investors
- Share options for employees doubled from £30,000 to £60,000
Stamp duty
- As cited above in further detail
Energy
- Freeze on energy bills, which the government claims will reduce inflation by 5 percentage points
- Total cost for the energy package expected to be around £60bn for the six months from October
Bankers’ bonuses
- Rules which limit bankers’ bonuses scrapped
- Package of regulatory reforms to be set out later in the autumn
Shopping
- VAT-free shopping for overseas visitors
- Planned increases in the duties on beer, for cider, for wine, and for spirits cancelled
Infrastructure and investment zones
- Government discussing setting up investment zones with 38 local areas in England
- Tax cuts and liberalised planning rules to be offered to release land for housing and commercial use
- Investment zones offered measures such as no business rates and stamp duty waived
- New legislation to cut planning rules, get rid of EU regulations and environmental assessments in an effort to speed up building
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