This afternoon the Chancellor announced changes to the way that stamp duty (a one time tax paid on the acquisition of property in the UK) will be calculated. These changes are effective as from the 4th of December 2014.
The Chancellor, George Osborne in the House of Commons today said :
“It’s time we fundamentally changed this badly-designed tax on aspiration. So I am today abolishing the residential slab system altogether. In future each rate will only apply to the part of the property price that falls within that band – like income tax.”
But what does this mean in practice? Effectively stamp duty has been reduced on residential properties valued up to £937,500. So someone buying a property for £650,000 as from tomorrow would pay £22,500 in stamp duty instead of £26,000. Stamp duty on a £510,000 property would be £15,500 instead of £20,400.
On the other hand, stamp duty on a property of £2.1M would amount to £165,750 instead of £147,000 whilst stamp duty on a £3M property would now be £273,750 instead of £210,000. The new rates are as follows:
Purchase price of property New rates paid on the part of the property price within each tax band
0 – £125,000 0%
£125,001 – £250,000 2%
£250,001 – £925,000 5%
£925,001 – £1,500,000 10%
£1,500,001 and over 12%
Buyers who have already exchanged contracts but have not yet completed will be allowed to choose which stamp duty system to use. All other other deals including those in which offers have been accepted but not yet exchanged will be subject to the new rates.
