Stamp Duty Land Tax

Do you think that the recent changes to Stamp Duty Land Tax (SDLT) which have delivered a progressive, rather than staged, approach result in a fairer tax on properties above £125,000? It would be difficult to conclude otherwise as HM Treasury announced that the tax ‘will be cut for 98% of people who pay it. If you’re buying a home for less than £937,000, you will pay less stamp duty, or the same’. This has to be good news if you’re planning a move any time soon and intend paying less than £937,000 for your new home.

So, what’s changed?

As of 4 December 2014, rather than paying a single rate of SDLT in respect of the whole purchase price, SDLT will be payable at different set rates on the portion of the purchase price that falls within each band. Under the previous 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.

The rates are:

Property value band SDLT rate
£0 to £125,000 0%
Over £125,000 to £250,000 2%
Over £250,000 to £925,000 5%
Over £925,000 to £1.5 million 10%
Over £1.5 million 12%

This new approach means average savings of:

£650 on an average help to buy home costing £185,000;

£4,500 on an average family home costing £275,000; and

£15,500 on an average London home costing £510,000.

The good news stops there, though. If you’re buying a property costing more than £2,100,000, there is an increase in duty of around £18,750 and if it’s commercial property you’re interested in, these changes will not benefit you. But overall, good news for the festive season.

HM Treasury has published a comprehensive guide to the changes which can be found on:

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/382324/Stamp_Duty_15.pdf

This post was edited by Charlotte Chapman. For more information, email blogs@gateleyuk.com.


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This blog is intended only as a synopsis of certain recent developments. If any matter referred to in this blog is sought to be relied upon, further advice should be obtained.