THE CHANCELLOR delivered a welcome surprise in his Autumn Statement last week with the announcement of sweeping reforms to stamp duty, a move that was welcomed by buyers and sellers, as well as the property industry.
HOW DID STAMP DUTY WORK? Under the old system, someone buying a home for £125,000 paid no tax, while someone buying a property for £125,001 paid 1 per cent (£1,250).
Those buying a property for £250,000 had to pay 1 per cent in tax (£2,500), while buying a property for £250,001 would incur duty at 3 per cent (£7,500) on the whole sum.
WHAT ARE THE CHANGES? The reforms remove the “dead zones” just above each existing stamp duty band, and see a more progressive approach where buyers will be liable only for the portion of a property’s value above each new level.
Under the new system, you will not pay tax on the first £125,000 of a property’s value. You will then pay 2 per cent on the portion from £125,000 to £250,000, 5 per cent up to £925,000, 10 per cent up to £1.5 million, and 12 per cent on everything above that.
WHEN WILL THE CHANGES TAKE EFFECT? The new system took effect from midnight last Wednesday 3rd December meaning home owners will benefit instantly.