Stamp Duty Changes: What You Need To Know

George Osborne says a fairer Stamp Duty system is replacing current “badly designed” rules – he claims 98% of buyers will pay less. But how much better off could you be if you moved house?

:: What Is Stamp Duty?

Officially called Stamp Duty Land Tax, it has to be paid on most purchases of houses, flats and other land and buildings.

:: How Did The Old System Work?

Buyers would simply pay a fixed percentage on the purchase price based on the brackets below.

- Up To £125,000 – 0%

- £125,000 – £250,000 – 1%

- £250,000 – £500,000 – 3%

- £500,000 to £1m – 4%

- £1m to £2m – 5%

- £2m or more – 7%

:: Was It Unfair To Buyers?

Some criticised this “cliff edge” system.

For instance, if someone was buying a house for £250,000 they would pay 1% (£2,490) on the whole value.

But, if they were perhaps tempted by a slightly more expensive house for £250,001, then the 3% rate would kick in.

They would be have to pay £7,530 – more than £5,000 more.

:: How Does The New System Differ?

The “cliff edge” system has been scrapped .

Buyers will no longer be hit with sudden jumps in Stamp Duty when their house edges into a new price bracket.

It will be far more gradual, with buyers taxed in ‘chunks’.

:: This Is How It Works…

Buyers will pay 2% tax on any property worth between £125,000 and £250,000.

And then 5% on any value between £250,000 and £925,000.

And then 10% on the chunk between £925,000 and £1.5m.

Any value above £1.5m will be taxed at 12%.

:: Will The New System Really Save Me Money?

The Chancellor says if you are buying a property that is under £937,000 you will pay less

Any more than that then you’re a loser – and will have to pay more.

:: How Much Cash Could I Save?

Property value:

-  Up To £125,000 – No change: £0 to pay.

- £185,000 – Old system – £1,850; New system – £1,200.  Saving = £650

-  £275,000 – Old system – £8,250; New system – £3,750.  Saving = £4,500

-  £510,000 – Old system – £20,400; New system – £15,500. Saving =£4,900

- £2.1m – Old system – £147,500; New system – £165,750. Loss = £18,750

Try other values using the Government’s Stamp Duty Calculator

:: When Do The Changes Come In?

Midnight on Wednesday, 3 December 2014.

Source Article from https://uk.news.yahoo.com/stamp-duty-changes-know-171305535.html

Stamp Duty Changes: What You Need To Know