The chancellor brought some festive cheer to the property market yesterday when he announced a cut in property stamp duty, the new stamp duty rates will mean a saving for 98% of home buyers according to the chancellor.
Under the old system you would pay stamp duty on the whole purchase price at a flat rate, which meant that at £250.000 you would pay 1% (£2.500) however if your purchase price was £260.000 then your rate would increase to 3% (£7.800) a difference of over £5.000.
Under the new system which came in at midnight on the 3rd December 2014 you will pay stamp duty in price bands similar to income tax, the new bands are as follows.
- £0 – £125.000 0%
- £125.001 – £250.000 2%
- £250.001 – £925.000 5%
- £925.001 – £1.5 million 10%
- £1.5 million and above 12%
As an example someone buying a property for £285.000 would have paid £8.550 under the old system and only £4.250 under the new system a saving of £4.300.
Working example of new duty based on £285.000 purchase price.
- First £125.000 £0
- Next £125.000 £2.500
- Next £35.000 £1.750
- Total stamp duty £4.250
This saving will not only bring new buyers into the market but will also encourage home owners to sell and trade up market, for further information contact one of our advisers.