Stamp Duty Changes: What You Need To Know
12-04-2014
Find out all key points on the Stamp Duty overhaul and how much money you might save under the Chancellor's new rules.
George Osborne says a fairer Stamp Duty system is replacing current "badly designed" rules he claims 98% of buyers will pay less. But how much better off could you be if you moved house?
What Is Stamp Duty?
Officially called Stamp Duty Land Tax, it has to be paid on most purchases of houses, flats and other land and buildings.
How Did The Old System Work?
Buyers would simply pay a fixed percentage on the purchase price based on the brackets below.
- Up To £125,000 0%
- £125,000 - £250,000 1%
- £250,000 - £500,000 3%
- £500,000 to £1m 4%
- £1m to £2m 5%
- £2m or more 7%
:: Was It Unfair To Buyers?
Some criticised this "cliff edge" system.
For instance, if someone was buying a house for £250,000 they would pay 1% (£2,490) on the whole value.
But, if they were perhaps tempted by a slightly more expensive house for £250,001, then the 3% rate would kick in.
They would be have to pay £7,530 - more than £5,000 more.
How Does The New System Differ?
The "cliff edge" system has been scrapped.
Buyers will no longer be hit with sudden jumps in Stamp Duty when their house edges into a new price bracket.
It will be far more gradual, with buyers taxed in 'chunks'.
This Is How It Works
Buyers will pay 2% tax on any property worth between £125,000 and £250,000.
And then 5% on any value between £250,000 and £925,000.
And then 10% on the chunk between £925,000 and £1.5m.
Any value above £1.5m will be taxed at 12%.
:: Will The New System Really Save Me Money?
The Chancellor says if you are buying a property that is under £937,000 you will pay less
Any more than that then you're a loser - and will have to pay more.
:: How Much Cash Could I Save?
Property value:
- Up To £125,000 No change: £0 to pay.
- £185,000 Old system - £1,850; New system - £1,200. Saving = £650
- £275,000 Old system - £8,250; New system - £3,750. Saving = £4,500
- £510,000 Old system - £20,400; New system - £15,500. Saving =£4,900
- £2.1m Old system - £147,500; New system - £165,750. Loss = £18,750
Try other values using the Government's Stamp Duty Calculator
When Do The Changes Come In?
Midnight on Wednesday, 3 December 2014.