It’s great news today for people purchasing a residential property as stamp duty will be cut for 98% of people who pay it!
In the Chancellor’s Autumn statement yesterday afternoon, significant changes have been made to Stamp Duty Land Tax (“SDLT”) on purchases of residential property where the purchase price is over £125,000.
The current system means that purchasers have to pay a flat rate on the whole of the purchase price. Under the new rules, which came into force at midnight yesterday, purchasers will only pay the rate of tax on the part of the property that falls within the relevant band. This new system is similar to Income Tax.
For example, if the purchase price is £185,000 under the old rules you would have paid 1% tax on the full amount, a total of £1,850 stamp duty. Under the new rules you will now pay nothing on the first £125,000 and 2% on the remaining £60,000. This works out as £1,200, a saving of £650.
If the purchase price is £275,000, under the old rules you would have paid £8,250 whereas under the new rules you will pay £3,750.
If you complete your purchase on or after 4 December 2014 you will pay stamp duty under the new rules. If you exchanged contracts before 4 December but complete your purchase after this date, you will have a choice whether to apply the new or old rules.
The HMRC have an online calculator https://www.hmrc.gov.uk/tools/sdlt/land-and-property.htm to assist you to work out how much SDLT you will have to pay or alternatively, contact Howells Conveyancing team on 0114 404 0606 or any of the numbers above.