The Chancellor George Osborne in the Autumn statement made a number of changes that will apply to Stamp Duty Land Tax with effect from midnight on 3rd December 2014.
Under the previous rules, stamp duty land tax was paid at a single rate on the entire property price. The changes introduce a reform of residential property stamp duty so that rates will now fall only to that part of the property price that falls within each band.
The new regime means that buyers continue to benefit from no stamp duty land tax being payable on the first £125,000 of the purchase price.
Different rates then apply in banded layers up to the total purchase price.
| Purchase price of property | Rate of SDLT |
| Up to £125,000 | Zero |
| Over £125,000 to £250,000 | 2% |
| Over £250,000 to £925,000 | 5% |
| Over £925,000 to £1.5 million | 10% |
| Over £1.5 million | 12% |
The Chancellor has said that 98% of house buyers will benefit from the SDLT changes.
For instance, where a property is bought for £185,000.00, the first £125,000.00 will be charged at 0% and the remaining £60,000.00 will be charged at 2% giving a total Stamp Duty Liability of £1200.00. Thus although the percentage rates appear higher in some cases, the overall charge will mostly be lower.
Under the old system the entire purchase price would have been charged at 1% giving a total Stamp Duty Liability of £1,850.00.
The move will see a reduction in the stamp duty payable on the large majority of property sales, but will create considerably higher liabilities on purchases of the highest-priced properties. Only people who buy homes worth more than £937,000 will pay more in tax following these changes.
If you have already exchanged contracts on a purchase, but completion has not yet taken place, you can opt to pay under either the old or the new system.
There is no change to how SDLT is calculated on purchases of non-residential property or on the rent payable when a new lease is granted.
If you would like more information on the payment of stamp duty on residential property, please contact the Head of our Property Team, Elton Ashworth on 01254 701111 or elton.ashworth@watsonramsbottom.com