Stamp duty holiday explained

The stamp duty holiday gave the UK property market a much-needed boost during the COVID-19 pandemic. Now the tax has been cut again as part of the Chancellor’s growth plan. We look at what’s changed and the current rates of stamp duty.

Alex Hasty

Insurance and finance expert

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Last Updated 28 SEPTEMBER 2022

Stamp duty update

Stamp duty thresholds have been raised from 23 September 2022. The government says the move will lift 200,000 homebuyers every year out of paying the tax.

See more on how stamp duty works

Work out how much you’ll need to pay with our stamp duty calculator.

What is stamp duty?

Stamp Duty Land Tax (SDLT) is a tax you have to pay when buying a property over a certain price threshold in England and Northern Ireland.

Scotland and Wales have slightly different tax systems. In Scotland, buyers pay Land and Buildings Transaction Tax, while buyers in Wales pay Land Transaction Tax.

The property price threshold – over which buyers in England and Northern Ireland must pay SDLT – is now £250,000, or £425,000 for first-time buyers.

What was the stamp duty holiday?

The stamp duty holiday was initially introduced in July 2020, then extended until 30 June 2021, to boost the UK property market during the COVID-19 pandemic.

This meant that buyers completing a purchase on a property for less than £500,000 before 1 July 2021 didn’t have to pay stamp duty.

From 1 July to 30 September, it was payable on the cost of properties above £250,000. Then, from 1 October 2021, the holiday ended and stamp duty reverted to pre-holiday rates, starting at £125,000. The thresholds have now been raised again, starting on 23 September 2022.

Use our stamp duty calculator to work out how much SDLT you may need to pay.

Stamp duty rates from 23 September 2022

If the property you’re buying is your main home, rates are as follows:

Property price	Stamp duty rate
Up to £250,000	Zero
Portion from £250,0001 to £925,000	5%
Portion from £925,001 to £1.5 million	10%
Remaining amount above £1.5 million	12%

For example, if you buy a house for £750,000, the SDLT will be:

0% on the first £250,000
5% on the remaining £500,000 = £25,000
Total SDLT = £25,000

If you’re buying an additional residential property, for example a holiday home, you’ll usually have to pay 3% on top of SDLT rates. There are also different rules and rates if you’re buying a shared ownership property.

Stamp duty rates for first-time buyers from 23 September 2022

If you’re buying a home for the first time from 23 September 2022, stamp duty rates will be:

Property price	Stamp duty rate for first-time buyers
Up to £425,000	Zero
Portion from £425,001 - £625,000	5%

If the property costs more than £625,000, you’ll be charged the same rates as existing homeowners who are buying their next property.

How did the stamp duty holiday affect house sales?

Unsurprisingly, the potential savings gained from the stamp duty holiday sparked a buying frenzy.

After the introduction of the stamp duty holiday in July 2020, house sales rose by 15.6% in August and a further 21.3% in September 2020.

The temporary stamp duty changes in 2020 also led to a rise in house prices, giving a much-needed boost to the property market, which slumped during lockdown.

Average house prices in the UK have continued to rise. They increased by 15.5% over the year to July 2022, up from 7.8% in June 2022. According to the Office for National Statistics, this is the highest annual inflation rate in the UK since May 2003. In July 2022, the average house price in the UK was £292,000.

Rightmove housing expert Tim Bannister said that the latest cut in stamp duty is likely to stimulate demand, which could lead to some price rises. However, he expects the increase in demand will be more gradual than during the stamp duty holiday.