New Stamp Duty Land Tax reforms - How this benefits both home buyers and sellers!

In brief, the SDLT reforms outlined in George Osborne's Autumn statement is great news for both buyers and sellers. Buyers will save unless a property costs over £1million (which you may have noticed there isn't a huge amount of this housing stock in the West Yorkshire region). Those sellers with properties worth in the region of £250-275,000 should benefit most from the changes because buyers are no longer penalised massively for offering over £250,000 due to the large hike in the stamp duty they would need to pay.

The new rules state that as of 4th December 2014 instead of home buyers paying tax on the whole property price where it breaches the stamp duty threshold, they will now only pay tax on the amount over the threshold. The percentages and bandings have also changed, meaning that only the top 2% of all transactions will be worse off with the new rates.

So for example:

If a buyer purchases a house at £255,000, they will now pay SDLT of 5% on the £5000 which is over the £250,000 threshold (£250), plus 2% on the amount between the first and second thresholds of £125,000 and £250,000 (so 2% of £125,000, or £2,500). Previously they would have had to pay 3% SDLT on the whole £255,000. On the new rates the buyer will pay £2,750, on the old rates it would have been £7,650, meaning a saving of £4,900.

Old SDLT rates for residential property:

  • Up to £125,000 - no tax
  • Over £125,000-£250000 - 1% payable on whole purchase price
  • Over £250,000-£500,000 - 3% payable on whole purchase price
  • Over £500,000-£1 million - 4% payable on whole purchase price
  • Over £1 million-£2 million - 5% payable on whole purchase price
  • Over £2 million - 7% payable on whole purchase price

New SDLT rates for residential property:

  • Up to £125,000 - no tax
  • Over £125,000-£250000 - 2% payable on the portion above £125,000
  • Over £250,000-£925,000 - 5% payable on the portion above £250,000
  • Over £925,000-£1.5 million - 10% payable on the portion above £925,000
  • Over £1.5 million - 12% payable on the portion above £1.5 million

Use the Stamp Duty Calculator to work out how much tax you'll have to pay on a property purchase.

Visit the Government website for full details of the changes

Published on 04 December 2014

Source Trinity Sales Wakefield

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