In today’s Autumn Statement, Chancellor George Osborne, has announced sweeping changes to the system of Stamp Duty. The current system of whichever banding the property price falls into being levied on the whole of the value of the property, will be replaced by one of gradients so that different rates will apply depending on the portion of the purchase price that falls into each rate band. The bands are:
£0 – £125,000 0%
£125,001 – £250,000 2%
£250,001 – £925,000 5%
£925,001 – £1.5m 10%
Over £1.5 million 12%
By way of an example, a £600,000 purchase will incur Stamp Duty of:
0 pc on the first £125,000
2 pc on the next £125,000
5 pc on the next £350,000
Stamp Duty payable on the above example will be £20,000, but on the previous system it would have been £24,000.
The Chancellor suggests that Stamp Duty will be cut for some 98pc of homebuyers who pay it. You will end up, however, paying more Stamp Duty under the new system if you buy anything above £937,000.
The changes come into effect at midnight on 3rd December 2014, but will not apply to people who are already in the process of purchasing their chosen property.