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Stamp Duty Reform, what does this mean for you?

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With immediate effect 98% of home-buyers will save thousands of pounds following Goerge Osborne’s autumn statement announced on the 3rd December 2014.  

What is Stamp Duty Land Tax? (SDLT)

This is a tax payable when you purchase a new home. The key importance is how much the property costs as the level of tax payable is determined from the value of the property price.

Who this will effect?

The changes in stamp duty will only affect residential property matters and does not apply to commercial property transactions.

Who this will not effect?

If you have exchanged contracts on or before the 3rd December 2014 and the transaction is due to complete on the 4th December 2014 or later, the buyer can choose to use the old or new rules.

What has changed?

The old stamp duty rules had 6 bands where stamp duty would have been payable, these were as follows:

Purchase PriceSDLT Rate
Up to £125,0000%
Over £125,000 to £250,0001%
Over £250,000 to £500,0003%
Over £500,000 to £1 million4%
Over 1 million to 2 million5%
Over £2 million7%

Stamp duty will now be applied like income tax and under the new rules stamp duty will be paid on the portion of the purchase price that falls within each band. The new rates are as follows:

Purchase PriceSDLT Rate
Up to £125,0000%
Over £125,000 to £250,0002%
Over £250,000 to £925,0005%
Over £925,000 to £1.5 million4%
Over 1.5 million12%

So for example, if a buyer purchases a property for £280,000 on or after the 4th December 2014 the stamp duty will be calculated as follows:

0% payable on the first £125,000 = £0

2% payable on the next £125,000 = £2,500

5% payable on the final £30,000 = £1,500

Total SDLT payable = £4,000

This is a saving of £4,500 under the new rules as previously a rate of 3% would have been applied when calculating stamp duty.

Will everyone benefit?

Anyone who buys a home costing less than £937,000 will benefit from this change. However, those who spend more will face a higher SDLT bill. For example if you buy a home for £1.5 million you will now pay £93,750 in stamp duty whereas under the old rule you would have paid £75,000. This makes a total loss of £18,750.

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