Stamp duty reforms on residential properties
There has been a change to the rules concerning stamp duty which, for the majority of homebuyers, will now be reduced and deemed fairer. The new rules came into force on the December 4 2014 and the changes apply to you if you are buying a home in the UK for more than £125,000. In Scotland, the new rates will apply until April 1 2015 when the Land and Buildings Transaction Tax replaces stamp duty. Under the old rules, you would have paid tax at a single rate on the entire property price. But now you will only pay the rate of tax on the part of the property price within each tax band, similar to income tax. Also under the old rules, if you bought a house for £185,000, you would have had to pay 1 per cent tax on the full amount or a total of £1,850. Under the new rules, for the same property you’ll pay nothing on the first £125,000 and the 2 per cent on the remaining £60,000 which works out at £1,200 - a saving of £650. If you are in or are about to be begin the process of buying a house, HM Revenue and Customs (HMRC) has an online calculator to help you work out how much stamp duty you will have to pay. HMRC has estimated that stamp duty will be cut for 98 per cent of people who pay it and if you are buying a home for less than £937,500, you will either pay less stamp duty or exactly the same as before. But these rule changes only apply to residential property purchases, as opposed to commercial ones. The changes have been broadly welcomed by the property industry, and especially by prospective new homeowners, as a potentially chunky cost involved with moving property has been reduced for the vast majority of people.
Chancellor George Osborne said the changes had replaced “a badly designed system that has distorted our housing market for decades”.