New Stamp Duty Rules Start Today!
As of today Stamp Duty has been reformed, and in many cases will greatly reduce the stamp duty payable on a house purchase.
The chancellor has removed the ‘slab’ system where you pay a set percentage on the whole purchase price and replaced it with a ‘phasing’ system, which means you pay a greater percentage of tax only on the higher amount. Critically for most home buyers, the first £125,000 of the purchase price is taxed at 0%.
To demonstrate the potential savings, its best to give some examples:
Take a house that is being bought for £300,000.
On the old system, you would have paid 3% on the whole amount which would be £9,000.
On the new system you pay nothing on the first £125,000. You then pay 2% on the value from £125,000 to £250,000, (£2,500) plus 5% on the value from £250,000 to £300,000 (£2,500). That’s a total of just £5,000, and a saving of £4,000.
George Osborne has claimed this would cut the rate of tax for 98% of house purchases. But at the top end of the housing market, when sale prices get over £1.2million, the stamp duty is likely to be much more than under the old scheme.
Commentators have predicted that the prices on these high value properties will fall, and the housing market at the lower end will be stimulated, with prices rising.