The government has introduced a new regime for calculating stamp duty land tax payable on the purchase of residential property. The new system came into effect from 4 December 2014 and provides that the new rates of stamp duty will only apply to the amount of the purchase price that falls within the relevant duty band. The new rates are as follows:
- Up to £125,000 at 0%
- £125,001 to £250,000 at 2%
- £250,001 to £925,000 at 5%
- £925,001 to £1.5m at 10%
- Above £1.5m at 12%
By way of illustration if someone now bought a property for £200,000 they will pay nothing on the first £125,000, and then 2% of the next £75,000. This means that the stamp duty land tax payable would be £1500. This represents a move away from the old system, whereby the stamp duty tax payable was based on successively higher rates based on the whole of the purchase price. The government estimates that the changes will mean less stamp duty land tax is payable in 98% of residential property transactions. You can find out for yourself how much stamp duty land tax will be payable on a future property purchase by accessing HMRC's stamp duty land tax calculator at http://www.hmrc.gov.uk/tools/sdlt/land-and-property.html If you would like any further information please do not hesitate to contact Tom Weightman on 0114 224 2168 or email [email protected].
