In his Autumn Statement the Chancellor of the Exchequer, George Osborne, introduced important changes to the Stamp Duty Land Tax (SDLT) regime for residential property.
On the purchase of a property above £125,000, SDLT becomes payable. Under the old regime the SDLT percentage rates increased at various thresholds, including £250,001 and £500,001. Under the old rules SDLT was payable at a single rate on the whole transaction value.
From 4 December 2014, SDLT is payable on a sliding scale. The Chancellor believes that this is a fairer way to tax property owners at the point of acquisition of a property and should stop buyers and property advisers trying to find artificial ways to avoid SDLT.
HM Revenue & Customs states as follows:
'From 4 December, SDLT for residential property is charged at different rates depending on the portion of the purchase price that falls within each rate band. There is no change to how SDLT is calculated on purchases of non-residential property or on the rent payable when a new lease is granted.
The changes will apply to residential properties completed on or after 4 December 2014. 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 to use the old or the new rules'.
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Purchase Price of Property
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Rate of SDLT
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Up to £125,000
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Zero
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Over £125,001 to £250,000
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2%
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£250,001 to £925,000
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5%
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£925,001 to £1.5 million
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10%
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Over £1.5 million
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12%
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There is no doubt that the SDLT changes will be of benefit to many home buyers. For example, under the old regime, Stamp Duty Land Tax payable on a purchase price of £350,000 would be £10,500 and under the new regime it would be £7500, representing a saving of £3,000.
For a link to the HMRC SDLT calculator to help you work out the SDLT payable on your purchase go to: HMRC SDLT tool
If you would like to discuss this or any issue relating to your property sale or purchase, contact us.