On 4th December 2014, George Osborne announced in his Autumn Statement that there will be changes to stamp duty. But do you know what this means for you?
Stamp duty was originally calculated on a percentage of the full purchase price over £125,000. There were three brackets which determined how much stamp duty you would pay:
- Less than £125,000 = 0%
- Between £125,000 and £250,000 = 1%
- Over £250,000 = 3%
For example, a property bought for £300,000 would fall into the bracket where 3% of the purchase price is paid, which would mean that the stamp duty would be £9,000.
New stamp duty rates
Under the new scheme a buyer does not pay any stamp duty on the first £125,000 of the purchase price, and a new scale is used for properties priced over this amount.
The new stamp duty scale is as follows:
- Up to £125,000 = 0%
- On any amount over £125,000 and up to £250,000 = 2%
- On any amount over £250,000 and up to £925,000 = 5%
- On any amount over £925,000 and up to £1,500,000 = 10%
- On any amount over £1,500,000 = 12%
How the new stamp duty works
Here’s an example: Take a property being purchased for £200,000 the new stamp duty. The cost would be calculated as follows, 0% on £125,000 = £0, 2% on £75,000 = £1,500. This would mean that the total stamp duty payable would be £1,500. Under the previous provisions the stamp duty would have been 1% on the total amount meaning £2,000 would be payable.
The new regulations are fairer but can be complex to work out. If you would more information about stamp duty provisions or need help with your property purchase, call 0800 138 0458 or send us your query using our contact form.