reform
Stamp Duty
you would be liable for a SDLT payment
of £7,530.00, a difference of over
£5,000.00. This was problematic for
sellers as well as buyers. A home with
a value of just over a threshold would
often sell for less as buyers were simply
not prepared to take the drastic hit to the
pocket.
What’s changed?
If you’re buying at a low price, then not
very much has changed. There will still
be no tax on purchases up to £125,000.
In fact, the first £125,000.00 of any
purchase will not be taxed at all, and
the following bands will now be more
proportionate:• 2% on the portion up to £250,000
• 5% on the portion up to £925,000
• 10% on the portion up to £1.5 million
• 12% on everything above that.
This means that now if you were to buy
at £249,000.00, your SDLT fee would
be £2,480.00 as you are paying 2%
of the value of anything upward of the
£125,000.00 threshold.
Chancellor George
Osborne’s Autumn
Statement brought with it a
surprise reform to the way
Stamp Duty Land Tax is
payable – and it all changed
last December.
The reform means that lower fees will
now be payable for the majority of
buyers, taking some financial strain
away from what can be an extremely
expensive experience. This follows
the Help-to-Buy scheme in the
Government’s efforts to make it easier
for the first-time buyer to get their foot on
the property ladder.
Stamp Duty Land Tax (SDLT) is the
current tax paid by buyers when they
purchase a proper ty, whether it be for
residential or buy-to-let properties, and
has long been a point of contention
88
due to the ‘slab structure’ of payment.
This means that a buyer would pay a
percentage of the worth of their new
home according to which band the
price fell into. Therefore, considerable
increases would occur if your property
fell into a band just £1.00 higher than the
one below.
How did it work?
Stamp Duty was not payable if
you were buying a property for less than
£125,000, but after that there were five
bands:
• etween £125,001 and £250,000 – 1%
B
of the value of the property;
• etween £250,001 and £500,000 –
B
3%;
• etween £500,001 and £1m – 4%;
B
• Between £1m and £2m – 5%;
• Above £2m – 7%.
This would mean that to purchase a
property at £249,000.00, you would incur
a fee of £2,490.00. However, jumping
the threshold and buying at £251,000.00,
This may not seem like a large
difference, but it could mean a lot if your
seller is not willing to accept an offer
lower than £251,000.00. In this instance,
your SDLT liability would now become
£2,550.00 (a huge reduction from the
previous £7,530.00 fee) as you are
paying the 2% up to £250,000.00 and
5% of the £1,000.00 remaining.
Does the new system work for me?
According to the Treasury, the answer
is yes for about 98% of households.
However, anyone spending over
£937,000 faces a higher bill. The HMRC
has added a handy online calculator if
you would like to see how this change
may now affect your upcoming purchase
(or in some cases, torture yourself over a
recent high Stamp Duty Payment) go to:
www.hmrc.gov.uk/tools/sdlt/land-andproperty
By Sinead McGeady