New Stamp Duty Land Tax Rates! How this affects you and your purchase…
From 4 December 2014, Stamp Duty Land Tax (SDLT) will no longer be charged as a single percentage based on the value of the property.
SDLT will now be charged at different rates depending on the portion of the purchase price that falls into each rate band (below).
The new SDLT rates applicable for residential properties are as follows;
| £0 - £125,000 | 0% |
| £125,001 - £250,000 | 2% |
| £250,001 - £925,000 | 5% |
| £925,001 - £1.5 million | 10% |
| Over £1.5 million | 12% |
Example: If you purchase a property for £275,000 on or after 4 December 2014, the calculation would be as follows;
0% on the first £125,000 = £0
2% on the next £125,000 = £2,500
5% on the final £25,000 = £1,250
Total SDLT payable = £3,750 (would have been £8,250)
Example: If you purchased a property for £400,000 on or after 4 December 2014, the calculation would be as follows;
0% on the first £125,000 = £0
2% on the next £125,000 = £2,500
5% on the final £150,000 = £7,500
Total SDLT payable = £10,000 (would have been £12,000)
Where contracts have been exchanged on or before 3 December 2014, and the transaction is completed on 4 December 2014 or later, you can choose whether to use the old or the new rule.
It is apparent that these changes will benefit a huge number of purchases by reducing the amount of Stamp Duty Land Tax payable. In some cases, we have already seen the new rates half the amount of Stamp Duty payable in one transaction!
If you are unsure how the new rules will affect your SDLT payment, please speak to us.