Chancellor George Osborne surprised many during yesterday’s Autumn Statement by announcing an overhaul of Stamp Duty, a move which is estimated to benefit up to 98% of home buyers.
Previously, Stamp Duty Land Tax (SDLT) was payable by the majority of people purchasing a residential property in the UK. The amount charged varied depending on the purchase price of the property so a home bought for £125,000 was exempt from the levy. However, if the same property was purchased for £125,001 it would attract SDLT at a rate of 1% on the full purchase price, forcing the buyer to find a further £1,250.
The new rules, which came into force at midnight last night, mean SDLT will be applied as a graduated rate in a similar way to income tax. With figures released today by the Halifax showing the average purchase price of a UK property standing at £186,941 it does back up the Chancellor’s assertion that the overwhelming majority of house buyers will save under the new system.
Scott Neal, marketing manager at LPC Living, the developer owner by the Pervaiz Naviede Family Trust, said “SDLT has long been criticised by many as being unfair, particularly to first-time buyers who find it challenging saving up for a deposit, legal fees and survey costs. The strict banding also created artificial ceilings in the housing market where buyers would be reluctant to consider buying a home if it was marginally above the historic thresholds.”
“There have been a number of temporary changes to the system including a SDLT holiday between 2010-12 which increased the threshold for first-time buyers to £250,000, however, we welcome this overhaul of the system which is fairer to all home buyers.”
The new SDLT bands, introduced today, are set as follows: -
Up to £125,000 0%
£125,001 – £250,000 2%
£250,001 – £925,000 5%
£925,000 – £1.5m 10%
For further details about SDLT visit the gov.uk website.