STAMP duty can be hard to understand, and with a few changes set for 2022, here's everything you need to know.

Stamp duty can add thousands of pounds to cost of your move, but if you're a first-time buyer, you might be exempt.

Adding to the confusion, the rates of stamp duty have changed over the course of the pandemic. But here's everything you need to know.

What is stamp duty?

Stamp duty land tax (SDLT) is a lump sum payment you have to make when purchasing property over a certain threshold.

Who has to pay it?

First time buyers do not have to pay the tax on homes costing less than £300,000. They only have to pay it on properties costing more than this.

However, first-timers buying a property worth between £300,000 and £500,000 do pay a discounted rate of stamp duty of 5%.

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Have the rules have changed?

HMRC are now discussing potential changes to the SDLT rules for mixed use property purchases.

This can mean residential and non-residential properties, for example a country house with land used for grazing, or a large scale building used for flats and retail.

Last September, the government stopped what was called stamp duty holiday.

The aim was to give buyers a break and to buzz some energy back into the property market.

More changes could still be made this year, so keep an eye out on the government website.

It will return to its normal limit at £125,000 tomorrow – meaning you have one day left to make the most of the remaining help.

What happens now the stamp duty holiday has ended?

After 30 September 2021, stamp duty went back to its previous rules. 

You have to pay stamp duty on anything over £125,000 of the agreed sale price. 

It’s a tiered system, meaning you don’t pay the full rate on the entire property price, just the amount that dips into each tier. 

How much can I save as a first time buyer?

First-time buyers don't pay any stamp duty on homes costing less than £300,000.

That's a saving of £5,000 compared to someone who is not a first-time buyer purchasing a £300,000 home.

But if the property is more expensive, the tax kicks in.

First-time buyers pay the usual stamp duty rate of 5% on the amount between £300,001 and £925,000.

So, if you're buying a home worth £500,000 you would pay £10,000 in stamp duty.

Again, that's a serious saving though because for other buyers you start to pay 2% stamp duty at £125,001, which increases to 5% on any amount over £250,001.

A non-first-time-buyer purchasing a £500,000 home would pay stamp duty of £15,000.

If you want to check how much stamp duty you can expect to pay, there are plenty of online calculators that can help including one from the Money Advice Service.

Word of warning

As a first time buyer, you need to be aware that the £300,000 threshold will not apply if the home you are purchasing costs more than £500,000. If this is the case, you’ll pay the normal rate of stamp duty

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