Yesterday's Autumn Statement by the Chancellor contained some fairly dramatic changes to the way Stamp Duty Land Tax (SDLT) is calculated.
The changes come into place today, 4 December 2014, meaning that all home buyers will be affected immediately.
The good news is that the vast majority of people will pay less tax to the government when they buy a home. If the purchase price is less than £937,500, the SDLT payable will be less than it was before, but if the purchase price is greater than £937,500, there will be more SDLT to pay now.
Confused by all of this? You are not alone! The new system is more complicated to explain than the old one, but here's a simple summary:
- You pay no tax on the first £125,000 of the property you're buying.
- You pay 2% tax on however much of the value lies between £125,001 and £250,000.
- You pay 5% tax on however much of the value lies between £250,001 and £925,000.
- You pay 10% tax on however much of the value lies between £925,001 and £1.5 million.
- You pay 12% tax on however much of the value is above £1.5 million.
The simplest comparison is to think of it like income tax, where the amount of tax that you pay depends on how much of the property price falls within certain taxable rates.
If you're still not sure what this means you can enter the purchase price into the HMRC Stamp Duty Calculator at: http://www.hmrc.gov.uk/tools/
The following link is also helpful: http://www.bbc.co.uk/news/
Still not sure? Give us a call on 0113 264 4414 and we'll explain it all to you. We're here to guide you at all stages of the property buying process.Back to Blog