Stamp Duty…….. aka another dreaded tax which has absolutely no benefit to you and after all the tax you pay on income and the various other stealth taxes it is ultimately considered a ‘hurt’ tax to most!
But it has all changed – from midnight on 3rd December 2014 and for once this change in legislation WILL benefit the majority. Of course if you are buying for much more than a cool million then you can expect to pay more and the higher the price of the property then the higher Stamp Duty will cost you with the highest bracket now at 12%…..ouch! Please note that if you had exchanged contracts before the changes then you have the choice as to which system you can use.
The great news with this change is that the archaic system of the £250k barrier before the rate goes from 1% to 3% is now removed. Historically a property which is valued at say £265,000 would generally only achieve £250,000 purely because of the 3% tax charge. The beauty of the new system is that if your property is really worth £265,000 then you will achieve this amount. Far better system isn’t it?
Put simply you now only pay the portion of each price band which are as follows;
£0 to £125,000 = 0%
£125,001 to £250,000 = 2%
£250,001 to £925,000 = 5%
£925,000 to £1,500,000 = 10%
£1,500,001 and above = 12%
In cash terms this means the following;
| Purchase Price | Old system tax payable | New System tax payable |
|---|---|---|
| £150,000 | £1500.00 | £500.00 |
| £200,000 | £2,000 | £1,500 |
| £250,000 | £2,500 | £2,500 |
| £300,000 | £9,000 | £5,000 |
| £350,000 | 10,500 | £7,500 |
| £400,000 | £12,000 | £10,000 |
| £500,000 | £15,000 | £15,000 |
| £700,000 | £28,000 | £25,000 |
| £1,000,000 | £40,000 | £43,750 |
Stamp Duty – essentially, the biggest savings are for those buying at about £300,000.
If you do the maths you will find the break even point is £937,500. If you are lucky enough to be buying a £2m house in say Blackheath or Greenwich then you would pay £153,750 now compared to £100,000 under the old system…..WOW. Fantastic news for first time buyers and for home movers who are in the average bracket though.
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