After much speculation the Autumn Statement did reveal that George Osborne will abolish the slab structure of the Stamp Duty Land Tax and will replace it with a graduated system of tax rates which will lower the cost of buying a home for 98% of the country.
This means that people buying homes will only pay the tax rate on the part of the property which falls within the band instead of paying it on the whole price.
For homes up to £125,000 no stamp duty is payable then:
£125,001 to £250,000 – 2%
£250,001 to £925,000- 5%
£925,001 to £1,500,00- 10%
£1,500,001 and above 12% .
The new rules start tomorrow, on 4 December. People who have already exchanged contracts on their new home purchase but have yet to complete will get to choose whether they use the old or new rules, so those on the lower bands will see a nice saving on their property purchase but those at the higher values will be well advised to stick to the old rules. So there is no better time to think about getting your first time buyer mortage in place.
The Chancellor said that for a home which cost £255,000 the Stamp Duty charge would be £4,500 lower than it would have been under the old system.
As a reminder the old rates were:
£125,001 to £250,000 – 1%
£250,001 to £500,000 – 3%
£500,001 to £1m – 4%
£1,000,001 to £2m – 5%
Over £2m – 7%.
Osborne said just 2% of the population would lose out under the new structure and rates.
To read the government’s factsheet on the new Stamp Duty Land Tax click here
Chris Croake, Director and Mortgage Adviser at Choice Financial Solutions said “this will make a big difference to the vast majority of purchases, and for those buying under the £925,000 bracket they will be better off, however, given the steep increase above this level it I feel this can be seen as a deliberate move by the Government to cool the London property market”