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STAMP DUTY CUT FOR 98% OF HOME BUYERS

December 3, 2014 6:05 pm
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STAMP DUTY CUT FOR 98% OF HOME BUYERS

The Government today announced great news for homebuyers which will come into effect immediately – stamp duty, the amount of tax a buyer pays the Government when purchasing a home, is to be cut for the majority of buyers.

Buyers of an average priced home, the UK average is £275,000, will now pay £4,500 less in stamp duty than they would have done before today’s announcement. It means buyers will be able to put that saving towards their deposit or even some improvements which must be good for the housing market and the economy.

A first time buyer buying at £150,000 will now pay only one third of what they would have had to pay, £500 instead of £1500.

However a wealthy home buyer buying at £2 million will pay 50% more in stamp duty than he would have done previously, now paying a massive £153,750 in tax rather than the already huge £100,000 he would have paid in the old system.

All in all, we think the changes are good news as the tax is now payable at different rates on the various slices of the purchase price, whereas in the old system, you paid a percentage on the whole of the purchase price but there were different percentages which caused huge jumps in tax.

For example, you used to pay 1% tax on the value up to £250,000 but pay more than  £250,000 and you’d pay 3% on the whole amount i.e. £250k purchase was £2,500 in tax but £251k means you had to pay £7,530.

The tables below set out the new charging structure and provide some examples of new stamp duty liability compared to old.

 

Purchase price of property Rate of SDLT (percentage of portion of purchase price)
£0 – £125,000 0%
£125,001 – £250,000 2%
£250,001 – £925,000 5%
£925,001 – £1.5 million 10%
Over £1.5 million 12% 

 

 Sale Price       Previous Stamp Duty  New Stamp Duty     
£100,000 £0 £0    
£200,000 £2,000 £1,500    
£250,000 £2,500 £2,500    
£300,000 £9,000 £5,000    
£400,000 £12,000 £10,000    
£500,000 £15,000 £15,000    
£600,000 £24,000 £20,000    
£700,000 £28,000 £25,000    
£800,000 £32,000 £30,000    
£900,000 £36,000 £35,000    
£1,000,000 £40,000 £43,750    
£1,500,000 £75,000 £93,750    
£2,000,000 £100,000 £153,750    

 

 

 

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