The government has announced a major reform to the Stamp Duty Land Tax regime for residential properties, which is designed to make the system more efficient and fair. The new rules apply from 3 December 2014 and are intended to result in a lower tax bill for 98% of purchasers; however purchasers of higher value properties are set to pay significantly more.
Purchasers of residential property for £937,500 or less will pay the same or, in most cases, less tax than they would have paid under the old rules. Purchasers of residential property between £1m and £1.125m will also pay less tax. Purchasers of residential property for between £937,500 and £1m and above £1.125m will in most cases pay more.
Examples: Under the old rules if you bought a house for £600,000, you would have had to pay 4% tax on the full amount – a total of £24,000. Under the new rules, for the same property you’ll pay nothing on the first £125,000, 2% on the amount of the purchase price between £125,000 and £250,000, and 5% on the remaining £350,000 . This works out as £20,000, a saving of £4,000.
However if you buy a property for £1.5 million, the total tax payable will be £93,750 as opposed to £75,000 under the old rules – an increase of £18,750.
Please contact our Property Team for more advice: Daniel Moore on 020 7539 4108 (firstname.lastname@example.org).
This is intended for general information only and should not be considered as giving advice in relation to any individual case nor be taken as applying to any particular case. No liability is accepted for any such use of the information contained.