UK Housing News
Stamp Duty Threshold Reduction to £125k Expected to Increase the 14% of Brits Who Have Taken Out Short-Term Loans to Cover Unexpected Costs
Cornerstone Tax unveil the top 10 things you probably didn’t know about stamp duty
David Hannah, Group Chairman of Cornerstone Tax, reveals the pitfalls Brits need to be aware of regarding Stamp Duty
From March 2025, the UK's stamp duty threshold will drop from £250,000 to £125,000, increasing the tax on an average home from £2,768 to £5,268. Despite these forthcoming changes, many Brits remain unaware of the impacts of stamp duty on personal finances, with 14% having been forced to take out short-term loans or emergency credit to cover unexpected stamp duty payments. Moreover, many are unaware of the potential refunds they could claim when purchasing property in the UK, leading to growing distrust in one of the country's most unpopular taxes. David Hannah, Group Chairman of Cornerstone Tax, the UK’s leading stamp duty advisory firm, highlights that 36% of Brits mistrust the legal sector during property transactions and feel they have been overcharged by solicitors when buying or selling property. Furthermore, 61% of homebuyers have never even considered the possibility of errors in the stamp duty they paid.
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34% of British homeowners currently grant utility companies access to their land without realising that they could benefit from reduced stamp duty.
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31% of homeowners possess surplus land not included in their garden and are unaware they could reduce stamp duty payments.
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21% of homeowners use part of their property for commercial purposes when purchasing and could have accessed a reduced stamp duty rate.
Cornerstone Tax has also revealed through its exclusive data, the top ten things Brits must know in order to not fall foul of stamp duty, helping save Brits millions of pounds. Please find the list below:
1. The UK currently has no such independent office to ensure accurate stamp duty payments, with 52% of Brits believing that this institution should exist to prevent paying stamp duty turning into an unregulated sector.
2. 34% of British homeowners currently grant utility companies access to their land without realising that they could benefit from reduced stamp duty.
3. 25% of British homeowners have an annexe on their property and were not advised they could pay a reduced stamp duty rate when purchasing.
4. 31% of homeowners possess surplus land not included in their garden and are unaware they could reduce stamp duty payments. Surplus land outside your garden area can decrease the applicable stamp duty rate.
5. 21% of homeowners use part of their property for commercial purposes when purchasing and could have accessed a reduced stamp duty rate. Properties used for commercial activities at the time of purchase may qualify for lower stamp duty rate.
6. Brits do not have to pay SDLT or file a return if no money or other consideration changes hands for a land or property transfer.
7. No SDLT is payable, and no return needs to be filed if the property is inherited through a will.
8. Transfers of property due to divorce or dissolution of a civil partnership do not require SDLT payments or filing a return.
9. If you purchase a property deemed unfit for dwelling or uninhabitable at the time of purchase, you are entitled to a stamp duty refund.
10. When buying an additional property, such as a second home, Brits must pay an extra 3% in stamp duty on top of the standard rates. This increased rate applies to properties bought for £40,000 or more and does not apply to caravans, mobile homes, or houseboats.
David Hannah, Group Chairman of Cornerstone Tax, comments on stamp duty thresholds:
“The decision from the government to lower stamp duty bands shows a concerning deficit of joined-up thinking. Does this Chancellor and Prime Minister not understand that if they want 1.5 million new homes, they cannot drive landlords out of the market, incur additional charges for first-time buyers and freeze up working capital for developers – which can only be available if these homes are selling.
“These former two measures have further deterred market entrants and if I were a builder, I’d be freezing development until there’s a ready market. Looking at this combination of measures alongside the current structural issues plaguing the property market, it makes previous governments look like Nobel Prize laureates.
The government's proposed changes act as a reminder of the Development Land Tax, a measure from the 1970s levied on landowners who created value on unused land. At its height, developers were paying 80% on gains and it decimated construction in this country. The lesson learnt is straightforward. You can't incentivise development and growth through penalisation and taxation."
”Moreover, I expect stamp duty receipts to fall significantly, then to flatline in Q1 2025, potentially plunging the British property market into a desperate situation. In essence, reducing stamp duty thresholds means that it will ultimately be the consumers who foot the bill."
David Hannah, Group Chairman
