Autumn Statement 2022: Stamp Duty Land Tax

In Liz Truss’ mini budget on 23 September 2022, it was announced that the starting nil rate band of stamp duty land tax (SDLT) would be doubled to cover the first £250,000 of purchase price, to stimulate the residential property market. The previous Government intended for this to be a permanent change, rather than a temporary rates ‘holiday’.

Jeremy Hunt announced on 17 November 2022 that this change in the SDLT rate bands will now be temporary, and will end on 31 March 2025. It is worth noting that the previous Government’s rate increase is still not legislated, as the Stamp Duty Land Tax (Reduction) Bill 2022-23 has not yet had its third reading, so the relief is currently being applied by HMRC on a concessionary basis. It remains to be seen how Mr Hunt intends to lower the rate bands again, and whether the current bill will be amended to achieve this. In the past, rate band changes have been phased out gradually, and it’s likely the Government would follow this approach again to prevent excessive volatility in the property market.

First time buyer’s relief from SDLT was also extended by the previous Government, to cover the first £425,000 of purchase price. It is not yet clear whether this increase in the relief band for first time buyers will remain in place permanently.

The change in policy means that, from 31 March 2025, the SDLT liability for all purchases of a single property in England and Northern Ireland will re-increase by up to £2,500 (or up to £11,250 for first time buyers).

It should be noted that SDLT only applies to purchases of land in England and Northern Ireland, and the (now temporary) rates reduction does not apply to purchases of property in Scotland and Wales (which are liable to different stamp taxes instead). Following the mini-budget on 23 September 2022 the Welsh Government had announced their own changes to the rate bands of LTT. The Scottish Government is expected to announce any changes to the rates of stamp on Scottish properties on the 15 December, during the Scottish Budget.

Previously, during the 2021 increases to the SDLT thresholds, the application of Multiple Dwelling Relief (MDR) became more attractive. We are still awaiting the response to the HMRC consultation on the SDLT treatment of mixed-use property and the application of MDR. With no comment on this today, we will have to wait to understand the full impact of the temporary increase in the rate bands.