Stamp Duty Land Tax (Temporary Relief) Act 2023

The Stamp Duty Land Tax (Temporary Relief) Act 2023 received Royal Assent on 8 February 2023. It was introduced in the House of Commons as the Stamp Duty Land Tax (Relief) Bill 2022-23 on 24 October 2022. The Act increases a number of thresholds at which Stamp Duty Land Tax (SDLT) on residential property begins to be paid, therefore reducing the amount of SDLT paid for many house buyers, until 31 March 2025.

What is Stamp Duty Land Tax?

Stamp duty land tax (SDLT) is charged on the purchase of property or land. It applies in England and Northern Ireland only. There are separate property transaction taxes in Scotland (the Land and Buildings Transaction Tax) and Wales (the Land Transaction Tax). SDLT is charged on a ‘slice’ basis: SDLT rates are graduated so that more expensive properties face progressively higher SDLT rates. The amount of SDLT due depends on several factors, including the type of property sold, the price of the property, and who the purchaser is.

The Office for Budget Responsibility (OBR) said in its March 2023 Economic and Fiscal Outlook that SDLT raised £14.1 billion in 2021-22. Of this, £10 billion was raised from residential property, and £4.1 billion from non-residential property.

October and November 2022 announcements on SDLT

On 23 September 2022, then Chancellor Kwasi Kwarteng announced permanent reforms to SDLT among a number of taxation changes as part of the Truss Government’s “Growth Plan”:

• An increase in the threshold up to which SDLT is not paid – the ‘nil rate band’, or NRB – from £125,000 to £250,000.
• An increase in the NRB for first-time buyers, from £300,000 to £425,000
• An increase in the maximum amount first-time buyers can buy a house for and still be eligible for relief, from £500,000 to £625,000.

These changes were enacted with immediate effect after the House approved a Provisional Collection of Taxes Motion under the Provisional Collection of Taxes Act 1968.

During the Autumn Statement on 17 November, Chancellor Jeremy Hunt announced the introduction of a sunset clause to the SDLT reduction introduced by his predecessor, ending the relief in March 2025.

To make the SDLT reduction temporary, the Government tabled amendments to the Bill (PDF) prior to the Committee of the Whole House stage. This, alongside the Bill’s third reading, happened on 10 January 2023. The Bill was then considered in the House of Lords, and eventually received Royal Assent on 8 February 2023.

Commentary

Initial announcement

In its response to the ‘mini-Budget’, the Institute for Fiscal Studies welcomed the reduction to SDLT, although it pointed out that the increase to the First Time Buyers’ Relief would create a higher cliff-edge for properties falling just beyond the £625,000 threshold. The Resolution Foundation also welcomed the measure in its response to the statement, however it pointed out that its impact would be uneven, with a majority of the benefit of it being located in London and the South of England.

The Financial Times quoted experts in the property sector predicting that the measure would not hugely support buyers, or the housing market, saying the impact of the stamp duty cut could potentially be overshadowed by higher borrowing and mortgage costs.

Making the SDLT changes temporary

The proposed end of the SDLT holiday on 31 March 2025 was not debated in the House of Commons during the Autumn Statement on 17 November. Following the Autumn Statement, the response to the SDLT cut ending in March 2025 was not heavily discussed among industry experts. Whilst some said that the SDLT cut would hopefully result in a stronger start to 2023, and others praised the overall package delivered in the Autumn Statement, others criticised the proposed end of the cut in 2025, saying it would put first-time buyers in a significantly worse-off position.  

Further reading

The Library briefing on Stamp Duty Land Tax on residential property (August 2021) has detailed information, reactions, and commentary on the main reforms to SDLT in recent times, as well as a thorough historical background to the tax.