George Osbourne announced yesterday that Stamp Duty Land Tax (SDLT) will be cut for 98% of homebuyers. This is a long-awaited development for many and follows suit with the Scottish system, introduced two months ago.
In his Autumn Statement to the Commons, Mr Osbourne said the current system will be replaced by a graduated rate, similar to income tax calculations.
Previously, the amount owed jumped as values hit certain price bands, meaning homeowners at the top of the price band paid the same SDLT as those at the bottom of what were broad bands. Michael Foxford, Birchall Blackburn Partner and Residential Property specialist, explains:
“This is very sensible change in the short term. The old system meant no-one could easily sell or buy at the SDLT thresholds, which many people tried to avoid by apportioning fixtures and fittings.
“The new system is fairer and will remove anomalies. However, there is now considerable scope for the Government to tweak the rates more regularly, perhaps introducing a low rate at the bottom of the market and a much higher rate at the other end.”
The changes affect almost all property owners, particularly anyone buying. At the top end of land and property prices, sellers will also be affected – this is due to the SDLT’s impact on the overall cost of purchase to buyers, which tends to depress prices.
The old system was described as outdated by many and the reforms reflect the need for change. The new bands are:
- No tax between £0 and £125,000
- 2% between £125,001 and £250,000
- 5% between £250,000 and £925,000
- 10% between £925,001 and £1.5 million
- 12% on £1.5 million and over
This is a welcome change for many, who consider it to be better suited to the UK property market. Looking to the future, Michael comments:
“Stamp Duty is a tax the Government can now use more flexibly. It’s beneficial for house buyers in the short term but if the Government needs to raise additional tax, they now have a ready mechanism.”
Mr Osborne said the tax cut was worth £800 million per year.
If you’d like advice on how the Stamp Duty Tax reforms affect you, or need professional assistance to buy and sell your property, contact our experienced team on 0800 614 722.Specialist Conveyancers can simplify and streamline an often complex process, keeping prices competitive and consistently hitting your deadlines for a smooth process.