Stamp duty changes brings good news for home buyers

4 December 2014

The chancellor announced as part of his Autumn Statement that Stamp duty on home purchases is to be reformed from 4 December 2014. This is great news for the property market with 98% of homebuyers in England and Wales set to pay £4,500 less in stamp duty.

The new rates of stamp duty shown below will only apply to the amount of the purchase price that falls within the particular threshold.

• Up to £125,000 : 0%
• £125,001 to £250,000 : 2%
• £250,001 to £925,000 : 5%
• £925,001 to £1.5m : 10%
• Above £1.5m : 12%

No tax will be paid on the first £125,000 of a property, followed by 2% on the portion up to £250,000, 5% up to £925,000, 10% up to £1.5 million and 12 % on everything over that.

The new system will remove the bunching of property prices just below the old threshold levels, where a disproportionate system meant there was a huge jump in the amount of tax paid by a buyer on crossing a threshold.

For example, under the old system a customer buying a home for £250,000 would pay £2,500, or 1%, in stamp duty. But if the purchase price was £1 more, they would pay an extra £5,000, as they then pay 3% on the whole purchase price. From the 4 December, they would only pay £2,500 a saving of £4,000.

Buyers in the process of purchasing a home that have already exchanged on a property will have a choice about whether to use the old or new rates.

For more information on these stamp duty changes please click here

HMRC has an online calculator to help your clients work out how much stamp duty they will have to pay.

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