Partner and Head of Wills & Estate Planning at Andrew & Co Solicitors Helen Newson writes...
Chancellor Announces Surprise Stamp Duty Reform
- AuthorJoanne Sworder
George Osborne delivered some good news for home buyers in yesterday’s Autumn Statement by announcing a surprise reform of the stamp duty system.
From midnight, buyers will only pay the rate of tax on part of the property price. Previously they would have paid tax at a single rate on the entire property price, but under the new system buyers will pay stamp on the part of the property price within each tax band – like income tax.
As before there is no tax on purchases up to £125,000 so the changes will only affect you if you are buying a home in the UK for over £125,000.
For example, if you bought a house for £185,000, you would have had to pay 1% tax on the full amount – a total of £1,850. Under the new rules, for the same property you’ll pay nothing on the first £125,000 and 2% on the remaining £60,000. This works out as £1,200, a saving of £650.
For the majority of house purchasers in this area this is great news, potentially saving buyers hundreds of thousands of pounds through the county. It will also be welcome to home owners considering selling, as their properties could now look more attractive to buyers on tighter budgets.
Anyone buying a house costing less than £937,000 will pay less or the same amount of stamp duty. Anyone spending more, however, will face a higher bill. If you are spending £2.1m on a home, for instance, you will pay £165,750 as opposed to £147,000 – an increase of £18, 750.
Homebuyers who have already exchanged contracts on a property and have not yet paid stamp duty but complete the purchase on or after 4th December will be able to choose whether the old or new rules apply.
If you are thinking about buying a property, our residential property team can work out the stamp duty you will have to pay under the new system.
For more information please call our Lincoln office on 01522 512123 or our Newark office on 01636 673743.