Stamp duty changes: What do the changes mean for you?

05 December 2014

In the Autumn Statement this week, it was announced by the Chancellor of the Exchequer, George Osborne that Stamp Duty Land Tax (SDLT) rates for homebuyers have changed. This reform of how SDLT is calculated for residential property purchases which complete on or after 4 December 2014, means a saving for an estimated 98% of buyers immediately.  

As a homebuyer, you will no longer pay a SDLT rate on the whole purchase price, only the part of the property price that falls within each band - similar to the structure of Income Tax. The SDLT rate will now rise steadily meaning distortions in the market will be avoided. For example, under the old system, SDLT on buying a £250,000 home would be 1% meaning a sum of £2,500, but a transaction of £250,001 would have moved the whole amount into the higher 3% tax bracket and incur a SDLT payment of £7,500.  Under the new system, buying a house worth £250,001 would result in a bill of only £2,500. 

Where contracts have been exchanged before 4 December but complete on or after that date, the purchaser can choose whether to pay tax under the old or the new rules.

New stamp duty rates

In simple terms, someone buying a house for £200,000 will pay nothing on the first £125,000, and then 2% of the next £75,000, giving them a bill of £1,500. Previously they would have paid 1% on the total purchase price, giving them a bill of £2,000. Thus although the percentage rates appear higher in some cases, the overall charge will mostly be lower.

The new rates will be:

Stamp duty changes

In Scotland the new rates will apply until 1 April 2015, when the Land and Buildings Transaction Tax replaces stamp duty in Scotland.

Click here to view a summary of effective tax rates and what this will mean for properties of different prices. 

Stamp duty calculator

To find out how much you could save when buying a new home the HM Revenue & Customs website has an online calculator to help you work out how much stamp duty you will now have to pay. 

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