The stamp duty or tax bill on an average priced home in England is set to jump from £2,428 to £4,928 after next March. That’s more than double the cost of stamp duty this year
- In London the tax bill on an average priced first time buyer home will shoot from £1,064 to £7,314
- In February homebuyers paid £781m in Stamp Duty
Contractors and the self-employed looking to buy a house will be hit by a significant tax increase next year, according to Coventry Building Society. “In twelve months’ time people buying a home over £250,000 will suddenly have to pay an extra £2,500 in tax,” said Jonathan Stinton, Head of Mortgage Relations at Coventry Building Society.
The tax rise will affect most people buying a house unless they are a first-time buyer purchasing a property below £300,000. The average house price in England is currently £298,575, meaning most buyers will be hit by the increase.
“It’s a double hit because this hike is not only going to add thousands of pounds to peoples’ tax bills next year, it’s also going to cost buyers thousands of pounds in extra interest over the life of their mortgage. Some buyers will still be paying for this tax hike decades down the line,” said Stinton.
“The failure to make any meaningful changes to Stamp Duty in the Spring Budget was a blow to homebuyers when there was so much more which could have been done to make this tax better for everyone,” said Stinton.
He continued, “The Chancellor ignored this opportunity when he could have really got creative and introduced waivers for downsizers, incentivised energy efficient home improvements, or come up with fluid thresholds which move in line with inflation. Instead, no substantial changes were made and the clock is ticking for future homebuyers.”
As a basic guide, someone borrowing an extra £2,500 more to cover the additional tax on their home will pay £4,278 more over the term of a twenty five year mortgage, based on a rate of 4.75%.
The changes come into effect on April 1st 2025. Those looking to buy before then could save themselves a significant amount of money.