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Stamp Duty Land Tax reform

In the final Autumn Statement before the general election next year, the Chancellor, George Osborne has announced an overhaul of Stamp Duty Land Tax (SDLT).

At present, stamp duty is calculated as a percentage of the whole property with an increased rate triggered by being only a pound over the relevant threshold. The new measures introduced with effect from 4 December 2014 fundamentally change the way in which SDLT rates will be applied to the purchase price of properties.

The new stamp duty rate will be calculated as follows:

1. No tax on the first £125,000;

2. 2% on the portion between £125,001 to £250,000;

3. 5% between £250,001 to £925,000;

4. 10% between £925,001 to £1.5 million; and

5. 12% on everything above £1.5 million.

The Government predict that the new system will reduce the rate of SDLT for up to 98% of property purchasers.

Starting on 4 December 2014, a property purchase for £300,000 will attract SDLT of £5,000 as opposed to £9,000 under the old regime. The new system therefore saves the purchaser £4,000 on this transaction.

If you completed the purchase of your property on or before 3 December 2014 but have not yet filed your stamp duty return, you will still be liable to pay stamp duty under the old regime.

To work out the correct SDLT for any prospective house purchase, HMRC have released an updated tax calculator.

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