It has been needed for many years, but today the chancellor George Osborne has announced in the Autumn Statement that Stamp Duty is to be reformed from midnight tonight. The old stamp duty created problems with sale prices close to the thresholds of 1% and 3%. The new rules are as follows:
- Stamp duty to be reformed. The “single-slab” rate will go, and instead it will be levied at a more gradual rate.
- 98% of buyers will benefit.
- The reform will cost £800m he says.
- The new rates will be: nothing on the first £125,000, 2% on the share above that up to £250,000; then 5% on the next slice up to £925,000; then 10% on the next slice up to £1.5m; then 12% on everything above that.
- People buying an average house, worth £275,000, will save £4,500.
- New rates to come into force from midnight tonight.
Under the old rules, you would have paid tax at a single rate on the entire property price. Now you will only pay the rate of tax on the part of the property price within each tax band – like income tax. Under the old rules if you bought a house for £185,000, you would have had to pay 1% tax on the full amount – a total of £1,850. Under the new rules, for the same property you’ll pay nothing on the first £125,000 and 2% on the remaining £60,000. This works out as £1,200, a saving of £650.
You can find a really helpful ‘Stamp Duty Calculator’ from the HMRC right here. If you have any further questions please contact your local experts on 01933 651010 (Irthlingborough office) or 01933 224400 (Wellingborough office).