Changes To Stamp Duty

Changes To Stamp Duty

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.