This note lists a series of key documents on taxation.
This briefing is not being updated. Please see the library briefing paper on the Stamp Duty Land Tax (Reduction) Bill 2022-23 for updated information and the Stamp Duty Land Tax on residential property paper for further background information.
On 23 September 2022, the then Chancellor Kwasi Kwarteng announced changes to stamp duty land tax when purchasing residential property, as part of the Government’s Growth Plan.
In his statement to the House, Mr Kwarteng said these measures would “mean that 200,000 more people will be taken out of paying stamp duty altogether.” The Commons approved a motion giving these changes immediate effect.
This motion – a ‘Provisional Collection of Taxes Motion’ – has temporary effect. The Government must introduce legislation to make the changes permanent. The Stamp Duty Land Tax (Reduction) Bill 2022-23 would do this. This Bill was introduced on Monday 24 October and had its second reading that day.
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).
The amount of SDLT paid depends largely on three factors:
- The type of property sold. The rates of SDLT differ between residential property and commercial property.
- The selling price. The rates of SDLT are graduated so that more expensive properties face progressively higher tax rates. Rates only apply to the part of a property’s selling price that falls within designated value bands. This ‘slice’ design of tax rates and tax bands is similar to the design of income tax.
- The purchaser. If someone already owns a dwelling, they pay a 3 percentage point surcharge on standard tax rates when buying additional residential properties. Non-UK residents pay an extra 2 per cent surcharge when paying SDLT.
There are a variety of tax reliefs which purchasers may be entitled to claim, reducing the amount of tax paid on a transaction.
First-time buyers of residential property may claim tax relief if the purchase price is no more than £625,000. If someone is eligible they are charged tax at 0% on the first £425,000, and 5% on the remainder.
How does SDLT apply to house sales?
Table 1 shows SDLT rates and bands for residential property prior to Kwasi Kwarteng’s announcement.
The examples below show how this works in practice, with the amount of SDLT that would have been paid under the rates before 23 September, and after.
HM Revenue & Customs (HMRC) provide an online SDLT calculator for purchasers to work out how much tax they will pay.
HMRC’s Stamp Duty Land Tax Manual provides detailed guidance.
How much money does SDLT raise?
In 2021/22 SDLT raised £14.3 billion. Of this, £10.1 billion was raised from residential property and £4.2 billion was raised from non-residential property. These figures were published by the OBR in March 2022.
The Office for Budget Responsibility collate statistics on SDLT, as well as the property transaction taxes that apply in Scotland and Wales.
What changes to SDLT have been announced?
Chancellor’s statement on 23 September
On 23 September the then Chancellor Kwasi Kwarteng announced three changes to SDLT:
- an increase in the threshold up to which SDLT is not paid – the ‘nil-rate threshold’ – from £125,000 to £250,000.
- an increase in the nil-rate threshold for first-time buyers relief, 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.
The then Chancellor confirmed these changes were a permanent cut to SDLT, effective immediately.
Chancellor’s statement on 17 October
On 17 October the Chancellor Jeremy Hunt set out a series of changes to the Government’s fiscal plans. Mr Hunt confirmed the changes to SDLT thresholds that had been announced the previous month would remain in place.
Chancellor’s Autumn Statement on 17 November
On 17 November the Chancellor presented his Autumn Statement. As part of this Mr Hunt announced that the changes to SDLT thresholds would be temporary, and would remain in place until 31 March 2025.
How are these measures implemented?
Temporary implementation from 23 September
There is precedent for this approach: in July 2020 the Government introduced a temporary increase in the SDLT nil-rate (0%) band for residential property, as part of its response to the Covid-19 pandemic. Provision for this tax cut was made in a similar ‘stand alone’ Bill, though in this case the Bill completed all of its stages on the same day. The Commons Library briefing Stamp Duty Land Tax (Temporary Relief) Bill 2019‑21 provides further details.
Permanent implementation with the Bill
It is necessary for the Government to introduce legislation to give these changes permanent effect. The Stamp Duty Land Tax (Reduction) Bill 2022-23 would do this. The Bill was introduced on 24 October 2022, and had its second reading on that day. A date for the Bill’s remaining stages in the House of Commons has not been announced as yet.
HMRC has published an impact assessment on these changes to SDLT thresholds. This observes that the Government had not consulted on this measure because “this is a change which is wholly relieving.” It notes that “it would not be in the public interest to consult, as this may have an adverse effect on the housing market if buyers delayed purchases during the consultation period.”
As part of the Autumn Statement 2022 the Government has stated that it will amend the Stamp Duty Land Tax (Reduction) Bill to provide that the changes to SDLT thresholds are temporary, and remain in place until 31 March 2025. HMRC has published an impact assessment of this change. It is estimated that the temporary increase in SDLT thresholds will cost £775 million in 2022/23, rising to £1,180 million in 2023/24 (for details see, Autumn Statement, CP 751, November 2022, Table 5.1 items 41 and 57).
- Commons Library briefing Stamp duty land tax on residential property discusses the way that sales of residential property are taxed, and a series of reforms that have been introduced to stamp duty land tax in recent years. This briefing was last updated on 10 August 2021.
- Commons Library briefing September 2022 fiscal statement: a summary provides a summary of the statement made on 23 September by the then Chancellor Kwasi Kwarteng, with links to analysis and further reading.
- Commons Library briefing The 17 October 2022 fiscal statement: summary and background sets out the changes to the Government’s fiscal strategy as set out by the Chancellor Jeremy Hunt on 17 October.
- Commons Library briefing Autumn Statement 2022: A summary gives summary of the announcements in the Autumn Statement of 17 November 2022 and an overview of the latest economic forecasts.
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