Chancellor George Osborne announced yesterday in his Autumn Statement that with immediate effect there would be significant changes to Stamp Duty .
Stamp duty is presently a flat percentage of the purchase price: –
|
Purchase Price |
Stamp Duty Rate |
|
Up to £125,000 |
0% |
|
£125,000 to £250,000 |
1% |
|
£250,000 to £500,000 |
3% |
|
£500,000 to £1,000,000 |
4% |
|
£1,000,000 to £2,000,000 |
5% |
|
£2,000,000 and over |
7% |
The unfairness of the system is that the percentage is applied to the full purchase price even if you fall within one pound of the new tier i.e. as a buyer you would be subject to 3% stamp duty on a property worth £250,001 whereas only 1% if it was £250,000.
The new system allows for a different rate of tax to apply to each portion or tier as follows:-
|
Portion of Purchase Price |
Stamp Duty Rate |
|
Up to £125,000 |
0% |
|
£125,000 to £250,000 |
2% |
|
£250,000 to £925,000 |
5% |
|
£925,000 to £1,500,000 |
10% |
|
£1,500,000 and over |
12% |
Any buyer having already exchanged contracts but not completed will be able to choose whether to opt for the new or old system.
The Treasury said someone buying a property at the average family home price of £275,000 would save £4,500, while a £2.1m purchase would carry £18,750 more stamp duty compared with the old system. We have provided some examples below to show how the changes effect a variety of different purchase prices.
| Purchase Price |
Old Stamp Duty |
New Stamp Duty |
Saving / (Extra) |
|
£125,000 |
Nil | Nil | Nil |
|
£150,000 |
£1,500 | £500 | £1,000 |
|
£175,000 |
£1,750 | £1,000 | £750 |
|
£200,000 |
£2,000 | £1,500 | £500 |
|
£225,000 |
£2,250 | £2,000 | £250 |
|
£250,000 |
£2,500 | £2,500 | Nil |
|
£275,000 |
£8,250 | £3,750 | £4,500 |
|
£300,000 |
£9,000 | £5,000 | £4,000 |
|
£350,000 |
£10,500 | £7,500 | £3,000 |
|
£400,000 |
£12,000 | £10,000 | £2,000 |
|
£450,000 |
£13,500 | £12,500 | £1,000 |
|
£500,000 |
£15,000 | £15,000 | Nil |
|
£750,000 |
£30,000 | £27,500 | £2,500 |
|
£925,000 |
£37,000 | £36,250 | £750 |
|
£1,000,000 |
£40,000 | £43,750 | (£3,750) |
|
£1,500,000 |
£75,000 | £93,750 | (£18,750) |
|
£2,000,000 |
£100,000 | £153,750 | (£53,750) |
|
£5,000,000 |
£350,000 | £513,750 | (£163,750) |
We will cover the other announcements in the Autumn Statement in a further article.