George Osborne surprised many by announcing in his Autumn statement significant changes to the way stamp duty will be calculated from 4 December 2014. The good news is that the stamp duty tax will no longer be charged at the threshold percentage on the total asking price, but will be tiered in the same way as income tax is calculated.
Enter Property Value:
Stamp duty bands
Rate
Duty
£0 - £125,000
0%
-
£125,001 - £250,000
2%
-
£250,001 - £925,000
5%
-
£925,000 - £1.5m
10%
-
Above £1.5m
12%
-
Total Stamp Duty payable
-
You can see the effect in the graphic below which shows how the stamp duty percentage of the total selling price is gradually increased rather than as previously calculated. The effect should mean that, according to the treasury, people will pay less under the new system for homes sold up to £925,000, benefiting 98% of home buyers.
However the reform, whilst long overdue, will mean more people paying higher stamp duty in the long run with the housing market no longer constrained at the old price threshold levels and sellers free to tick up asking prices at all levels below the £925,000 threshold.
Use the new Stamp Duty calculator above, to work out how much stamp duty land tax will be payable before making a decision to buy.
Comparing the cost of stamp duty in UK with the equivalent in Australia using the link, the Aussies are paying far higher percentages than those in the UK!