Announced at the Autumn Statement, big changes were announced to Stamp Duty Land Tax. It has been reported that 98% of buyers would benefit from the changes, which came into effect yesterday, 4th December 2014. The announcement added that those who had exchanged on 3rd December or earlier, yet completed the purchase on 4th December onwards, would be able to opt for the new method, or the older method.
To confirm, the new rules are as follows:
• The first £125,000 attracts no stamp duty (and likewise, properties below this value are free of stamp duty)
• Between £125,001 and £250,000 there is a 2% charge.
• Between £250,001 and £925,000 there is a 5% charge.
• Between £925,001 and £1,500,000 there is a 10% charge.
• Over the £1,500,000 threshold is charged at 12%.
Example 1:
Mr Smith purchased a house for £90,000. This falls within the £125,000 threshold, and therefore no stamp duty is payable.
Example 2:
Mrs Smith purchased a house for £300,000. The first £125,000 is not subject to stamp duty. £125,000 is then charged at 2% given this is the balance between the £250,000 threshold and the tax free threshold. The remaining £50,000 is charged at 5% to generate a stamp duty bill of £5,000. i.e £125,000 x 0% = £0 £125,000 x 2% = £2,500 £50,000 x 5% = £2,500
Therefore:
£300,000 x (rates of 0%, 2% and 5%) = £5,000
For any assistance with your property and personal tax affairs, please do not hesitate to contact RITA4Rent, specialists in property and landlord taxation. We can be emailed by clicking here, or on Freephone 0800 1 22 33 57.
Further Reading:
HMRC Disclosure Form DO2 Delays