Stamp Duty Land Tax changes 2014

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5 Jan 2015

How will Stamp Duty affect you in 2015?

Author: Antony Gibson

During the 2014 Autumn Statement, Chancellor George Osborne announced that the Stamp Duty Land Tax will change, describing the system as a “badly designed tax on aspiration.”

Until now home buyers have paid Stamp Duty Land Tax (SDLT) on the entire purchase price of the residential property. With the new reforms a progressive structure has been put in place, similar to income tax, which Osborne says will benefit 98% of home purchasers, a tax cut worth £800m a year.

Anyone buying a house that costs between £125,001 and £937,500 will be paying less stamp duty, under the reforms, or the same amount.

The new Stamp Duty Land Tax reforms are:

  • No SDLT payable at all on properties up to £125,000
  • The first £125,000 on properties to be free of SDLT
  • Then payable at 2% payable on the portion up to £250,000
  • Payable at 5% on the portion up to £925,000
  • Payable at 10% on the portion up to £1.5m
  • Then payable at 12% on the portion over that amount

For example, with the old stamp duty rules, for a house bought for £185,000, you would pay 1% tax on the full amount, which would cost you £1,850. Under the new rules, for a house bought for the same price, you won’t pay any tax on the first £125,000, and 2% on the remaining £60,000. This means you will have to pay £1,200, a saving of £650.

Find out how much your Stamp Duty Land Tax is under the new reforms with HM Revenue & Customs free online SDLT calculator.

Antony Gibson, Residential Sales Director at Romans, comments on the reforms: "This reform will be warmly welcomed by the vast majority of buyers and sellers in 2015 as it brings a sense of fairness to Stamp Duty and how it is calculated.

“The previous system created anomalies within the market place as buyers sought to negotiate around the thresholds and whilst taxes are never popular, ones that were regarded as unfair were resented.

“The new system does offer the vast majority of buyers real cash savings – savings that can be redirected into the home they want to buy, home improvements, furnishings or will allow them to increase their deposit enabling them to secure a more favourable mortgage rate.

“There are those buyers whose liabilities, under the new proposals will increase as the purchase price increases but many will argue that the new system remains much fairer overall.”

Interestingly, in a recent survey, completed by 650 of Romans’ customers, 84% of them said Study Duty should be reformed in the 2015 budget. It looks as though the Chancellor agreed!

How will the Stamp Duty Land Tax reforms affect me in 2015?

If you exchange and complete on your property in 2015 you will pay stamp duty under the new rules.

What is Stamp Duty Land Tax?

Stamp Duty Land Tax (SDLT) is a tax that must be paid if you buy a property in the UK that costs more than £125,000. This is charged on all purchases of houses, flats and other land and buildings. Most UK land and property transactions must be notified to HM Revenue & Customs (HMRC) on a Stamp Duty Land Tax return within a certain time limit - even if no tax is due.

For more information about the Stamp Duty Land Tax reforms and how they will affect you talk to the experienced team at your local Romans branch.

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