Buyers benefit from a tax-free
bracket and incremental steps up
The change to residential property Stamp Duty Land Tax (SDLT) announced in the Autumn Statement 2014 will make the process fairer for the majority of homebuyers. The new rules started on 4 December last year, and these changes apply to you if you are buying a home in the UK for over £125,000.
Stamp duty will be cut for 98% of people who pay it – if you’re buying a home for less than £937,500, you will pay less stamp duty, or the same.
In Scotland, the new rates will apply until 1 April 2015, when the Land and Buildings Transaction Tax replace stamp duty in Scotland.
Under the previous rules, you would have paid tax at a single rate on your entire property price. The new system allows buyers to benefit from a tax-free bracket and incremental steps up in the same way as income tax is applied to earnings.
Previously, 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 at £1,200 – a saving of £650.