Autumn Statement – Stamp Duty Overhaul
In the most eye-catching move of the autumn statement Chancellor George Osborne has announced a complete shake-up of what he described as a “badly designed tax on aspiration”.
From midnight 3rd December 2014 Stamp Duty Land Tax is to be changed. He has removed the previous structure with its arbitrary levels, where homebuyers paid stamp duty on the entire purchase price of the property. Instead, he has replaced it with a new “progressive” or gradual system, which, he insisted would benefit 98% of home purchasers.
He told the Commons that those purchasers currently in the middle of house moving (we assume who have already exchanged contracts before the midnight deadline) will be able to choose whether to pay SDLT under the old or new system.
The new Stamp Duty rates are:
- No SDLT payable at all on properties up to £125,000
- The first £125,000 on properties to be free of SDLT
- Then payable at 2% payable on the portion up to £250,000
- Payable at 5% on the portion up to £925,000
- Payable at 10% on the portion up to £1.5m
- Then payable at 12% on the portion over that amount.
You can use the Stamp Duty Land Tax Calculator here: http://www.hmrc.gov.uk/tools/sdlt/land-and-property.htm
Frank Webster, who oversees Finders Keepers Inspired Investment, the Search and Acquisition division, commented: “This reform is long overdue and removes the distortions created by the old regime and ensures purchasers at the upper end of the market contribute fairly whilst helping those on the early steps of the housing ladder”.
Mr Osborne said the reform represented an overall tax cut of £800 million per year, and would save buyers of an average £275,000 home £4,500.
The move will mean that the new rate becomes a heavier burden on home buyers looking to purchase at the +£1m mark. It would also seem to be a shot aimed at taking the ‘wind out of the sails’ of other political parties who favour a Mansion Tax.