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Radical Stamp duty change by UK Government

Stamp Duty Land Tax is to be changed at midnight after today’s Autumn Statement by Chancellor George Osborne. Osborne announced that he would be completely reforming what he described as a “badly designed tax on aspiration”.

He has removed the old structure, by which home buyers paid SDLT on the entire purchase price of the property. Instead, he has replaced it with a “progressive” structure which, he insisted, would benefit 98% of home purchasers.

Where contracts have been exchanged on or before 3 December 2014, and the transaction is completed on 4 December or later, you can choose whether you follow the new or the old rules.”

Under the new reforms:

  • No SDLT payable at all on properties up to £125,000
  • The first £125,000 on properties to be free of SDLT
  • Then payable at 2% payable on the portion up to £250,000
  • Payable at 5% on the portion up to £925,000
  • Payable at 10% on the portion up to £1.5m
  • Then payable at 12% on the portion over that amount

The Chancellor expects the SDLT reforms to cost the Treasury a total of £4.4bn in the next six years. Calculations show the “pinch” point at being around the £1m mark, at which the new rate becomes a heavier burden on home buyers. However, where purchasers bought at exactly the previous “slab” thresholds of £250,000 and £500,000, there will be no difference in the amounts payable.

CityZEN believe the majority of their clients will benefit from the changes and we have listed below an example of what one of our client’s would be paying before and after the changes come in to effect.

Example of stamp duty cost paying £300,000 and completing on or before the 6th December 2014

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Example of stamp duty cost paying £300,000 and completing on or after the 7th December 2014

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