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Stamp duty slashed for 98% of home buyers
9 December 2014
Stamp duty paid when buying a home has been slashed for 98% of purchasers after Chancellor George Osborne acted to make this unpopular tax cheaper.
From December 4, 2014, the old rates and method of calculating stamp duty land tax are scrapped.
Instead, new rates and method of calculating the payment come in.
For years, industry experts and homebuyers complained the old method of working out stamp duty was unfair because adding just £1 to a property’s value at the threshold limits added thousands of pounds to the tax bill.
Now, just about everyone will pay less stamp duty.
The new rates and thresholds are:
||Stamp Duty rate
|Up to £125,000||0%|
|£125,001 - £250,000||2%|
|£250,001 - £925,000||5%|
|£925,000 - £1,500,000||10%|
|£1,500,001 and above||12%|
Source: HM Revenue & Customs (HMRC)
For a home valued at £510,000, instead of paying £20,400 stamp duty under the old rules, the new bill is calculated as:
• 0% for the first £125,000
• 2% for the next £124,999 = £2,500
• 5% for the remaining £260,000 = £13,000
This gives a tax saving of £4,900 and a stamp duty bill of £15,500.
Property investors or other home buyers who have exchanged contracts but not completed on December 4, 2014 can opt for paying stamp duty under the old or new rules.
Those exchanging and completing on or after December 4, 2014, pay under the new rules.
“In recent years the burden of stamp duty has increased on low and middle income families trying to buy a new home, as prices have risen,” said Osborne
“This makes it even more difficult to get together the cash deposits buyers need.
“It’s time we fundamentally changed this badly-designed tax on aspiration.
“So I am today abolishing the residential slab system altogether. In future each rate will only apply to the part of the property price that falls within that band – like income tax.
”As a result stamp duty will be cut for the 98% of homebuyers who pay it.”
Click here for HMRC’s online stamp duty calculator