MILLIONS of first-time buyers and home movers face a huge financial hit after stamp duty thresholds were cut this week.
Stamp duty land tax is a lump sum payment you have to make when you buy a property worth more than a certain threshold.
Previously first-time buyers purchasing a property worth up to £425,000 did not have to pay any stamp duty.
If the property was more expensive, they paid tax at 5% on the portion above £425,000 and up to £625,000.
But changes introduced this week mean prospective homeowners now face paying up to £6,250 in stamp duty on these property purchases.
In the Spring Statement last week, Chancellor Rachel Reeves did not mention extending the previous thresholds, which were set to come to an end on March 31.
As a result, from April 1, the threshold beyond which first-time buyers must pay stamp duty, plummeted to £300,000.
First-time buyers are not the only ones affected by the changes.
Home movers previously only paid land tax on purchases worth £250,000 or more.
But this threshold fell to £125,000 for owners who want to move up the ladder.
They will now pay stamp duty at 2% on the property’s value between £125,000 and £250,000.
Meanwhile, they must pay 5% stamp duty on between £250,001 and £925,000 of a home’s value.
[bc_video account_id=”5067014667001″ application_id=”” aspect_ratio=”16:9″ autoplay=”” caption=”Best schemes for first-time buyers” embed=”in-page” experience_id=”” height=”100%” language_detection=”” max_height=”360px” max_width=”640px” min_width=”0px” mute=”” padding_top=”56%” picture_in_picture=”” player_id=”default” playlist_id=”” playsinline=”” sizing=”responsive” video_id=”6352041684112″ video_ids=”” width=”640px”]As a result, these homeowners now face paying £5,000 in stamp duty when buying a property worth £300,000.
This is £2,500 more than they would have paid before the new thresholds came into effect.
[authenticated-scripts src=”%3Cscript%20class%3D%22palin-poll%22%20src%3D%22https%3A%2F%2Fwww.thesun.co.uk%2Fpollingwidgets%2Fv3%2Fwidget.js%3Fquestion_id%3D111012%26game%3Dpolling%22%3E%3C%2Fscript%3E” type=”embedded” width=”100″ /]The news is a huge blow for all first time buyers and home movers and will make it even more expensive to own your own home.
As a result of the changes, buyers will have to pay stamp duty on 93% of properties for sale, according to Leeds Building Society.
Previously they only paid stamp duty on 70% of houses on the market.
David Hollingworth, mortgage broker at L&C, said buyers who have been unable to complete their purchases before the deadline will be hard hit.
He said: “No one wants to give up thousands of pounds unnecessarily.
“Those that have hit delays that are out of their control and didn’t have a contingency in place will be in a difficult position and may ultimately have to try and renegotiate the purchase price down.”
Here we explain how much stamp duty you will now need to pay.
[iframe src=”https%3A%2F%2Fdatawrapper.dwcdn.net%2FY4fM5%2F1%2F” height=”515″ width=”100″ /]From this week first-time buyers purchasing a property worth £325,000 will be hit with a stamp duty charge of £1,250 – an increase from the previous rate of £0.
Meanwhile, those buying a property worth £425,000 will see their stamp duty bill rise to £5,000 when previously they also would have paid nothing.
Prospective buyers looking to purchase a home valued at £500,000 will see their stamp duty rise to £10,000 – £6,250 more than they would have paid before.
Additionally, those buying a property worth £600,000 will see their stamp duty rise to £20,000 – up from the previous rate of £8,750.
[iframe src=”https%3A%2F%2Fdatawrapper.dwcdn.net%2FzxzLj%2F1%2F” height=”660″ mobile_height=”660″ width=”100″ /]From this week home movers purchasing a property valued at £250,000 will be hit with a stamp duty charge of £2,500 – up from the previous rate of £0.
Those buying a property worth £500,000 will see their bill rise to £15,000 – £2,500 more than the previous rate.
Meanwhile, home buyers purchasing a property valued at £600,000 will see their stamp duty rise to £20,000 — up from the previous rate of £17,000.
How can I calculate how much stamp duty I need to pay?
There are several free online calculators that can help you to figure out how much stamp duty you owe.
For example, the website stampdutycalculator.org.uk can help you figure out how much stamp duty you need to pay.
To use it, select whether you are a first time buyer, moving home or it is an additional property.
You can then enter the purchase price and click calculate for it to instantly tell you how much you need to pay.