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New 2022 Stamp Duty Rates Explained

New 2022 Stamp Duty Rates Explained
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Almas Uddin
Almas Uddin

Founder and Mortgage Advisor

Almas Uddin27 Sep 2022

The changes to Stamp Duty rates announced in the Chancellor's speech last Friday (23rd September) have significantly changed the cost of investing in a new property, moving home or purchasing as a first-time buyer.

Stamp Duty is a tax payable on most property purchases, calculated as a percentage of the value. There is a threshold below which no Stamp Duty is owed and a higher threshold for first-time buyers.

New rates apply immediately, with the standard threshold doubled to £250,000 from £125,000. Therefore, you will have no tax to pay if you purchase a property for £250,000 or below.

Stamp Duty Rates from September 2022

Following Friday’s announcement, Stamp Duty rates on most property purchases are as follows:

Property Value

Old Stamp Duty Rate

Stamp Duty From Sept 2022

Up to £125,000



£125,000 - £250,000



£250,000 - £925,000



£925,000 - £1.5 million



£1.5 million and above



The 0% rate applies to first-time buyers for purchases up to £425,000. New buyers also benefit from a discounted rate on purchases up to £625,000, extended from £500,000.

How Do the Changes to Stamp Duty Impact How Much Tax I Need to Pay?

As we have shown, any property bought for under £250,000 will not attract any Stamp Duty – this is equivalent to just under the average cost of a UK home, according to the UK House Price Index.

If you were to have bought a home at the national average house price of £281,161 last month, the tax charge would have been:

  • 0% on the first £125,000 = £0
  • 2% on the next £125,000 = £2,500
  • 5% on the £31,161 balance = £1,558
  • Total Stamp Duty = £4,058

This total changes to £1,558.08 with the new Stamp Duty rates since the value up to £250,000 is now tax-free.

First-time buyers are exempt from duty on properties purchased up to £425,000, meaning that many homes will be exempt from any tax.

Stamp Duty is payable within 14 days of a property transaction completing, although rates and payment due dates vary in Scotland and Wales, where buyers have 30 days grace.

Late Stamp Duty payments can attract interest charges or fines on the duty owed.

This scenario is unlikely since most buyers complete a property purchase transaction through a solicitor, who will hold funds in escrow, including mortgage financing, before transferring the payable balance to the vendor or tax office as applicable.

Effects of Reduced Stamp Duty on the UK Housing Market

This latest news comes relatively soon after the tapered Stamp Duty holiday scheme implemented during the COVID pandemic ended. This previous initiative stimulated growth and housing market activity following lockdown periods.

Many property professionals believe this reduced tax was one of the primary drivers for huge demand levels, which saw homeowners achieve excellent returns on properties or have greater equity to finance upgrades.

The higher Stamp Duty thresholds, at a treasury cost of £14 billion, could promote similar scales of market demand.

Office for National Statistics figures indicate that the average property appreciated by 15.5% year-on-year in the 12 months to July 2022, an increased growth from 7.8% in June 2022.

Changes to Stamp Duty charges are coupled with the ongoing government Mortgage Guarantee Scheme. This scheme provides a mortgage guarantee to help homebuyers secure a mortgage with a deposit as low as 5%.

Changes to Stamp Duty for First-Time Buyers

The higher first-time buyer threshold will mean that people purchasing a property for the first time will often have no tax liability arising or will need to pay duty on a much smaller proportion of their property purchase value.

The Mortgage Guarantee Scheme launched in April 2021 and remains open to applicants looking to buy a property up to £600,000 – applicants do not need to be first-time buyers, but this group is eligible.

Exceptions include buy-to-let investments, some new build properties and second homes, which do not qualify for government support.

Mortgage Support Following Stamp Duty Reductions

While the sweeping tax reforms announced last week have been the topic of much controversy, there is little doubt that reduced property purchase taxes are good news for millions of UK buyers and homeowners.

Given the significant rises in average property values, it has been increasingly difficult to proceed with a move, or transition from tenant to homeowner, especially where interest rates have meant that mortgage costs are higher now than they have been for some time.

The savings available represent an average of:

  • £11,250 for a first-time buyer in London
  • £2,500 as a standard saving for a buyer relocating anywhere in the UK

Easing cost pressures for buyers will make purchasing a property more accessible. However, professional support remains strongly advisable to ensure you approach a lender with competitive terms and get the best possible mortgage deal.

For more information about the changes to Stamp Duty rates and thresholds and how these impact your required mortgage borrowing, please get in touch with Revolution Finance Brokers at your convenience.

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The content included in our articles, blogs, web pages and news publications is based on information accurate at the time of writing. Note that policies and criteria can change regularly throughout the UK mortgage lending market, and it remains essential to contact the consultation team to receive up to date guidance. The information included on the Revolution Brokers site is not bespoke to any circumstances or individual application scenarios and therefore is not intended to be used as financial advice. The content we share is designed to be informative and helpful but cannot be relied upon to provide individual advice relevant to your mortgage requirements. All Revolution team members are fully qualified, trained and experienced to provide mortgage advice of an independent nature.

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