Tags: Property, Commercial Property
The Chancellor’s announcement, made in his Autumn Statement today, will be good news for many home buyers.
Under the new rules, which take effect from Thursday 4th December, people buying properties for under £1M are likely to pay less in tax on the purchase.
Until now, Stamp Duty, (or Stamp Duty Land Tax, to give the tax its full title) has been paid based on bands – buyers paid no tax on properties bought for £125,000 or less, but paid tax at 1% on the whole of the purchase price if the purchase price of the property was £125,001 to £250,000, and 3% on the whole value of a house bought for £250,001 to £500,000, with higher bands for more expensive properties.
Under the new rules, the tax will be calculated based on the amount in each band – so where a house is bought for £125,001 or more, no tax will be paid on the first £125,000, tax at 2% will be paid on any amount between £125,001 and £250,000, and tax at 5% on the proportion of the purchase price above £250,000. There are further bands of 10% on the proportion of any sale price over £925,000 and 12% on amounts above £1,5M.
The effect of the changes will be that those buying for less than £925,000 will pay the same, or less, in stamp duty.
If you are buying a property worth £185,000, the effect of the change is to reduce your Stamp Duty bill by £650, from £1,850 to £1,200.
Head of FDC Law’s Property Department, Jonathan Wood, explains, “The changes are likely to make it easier to sell houses at values close to the stamp duty thresholds – in the past, selling a house for £251,000 rather than for £249,000 would have meant the buyer paid £5,040 more in tax – now, the difference will be £70.”
If you are thinking about moving, our Residential Property Department can help. Contact us for more information.
