Stamp Duty Land Tax Budget December 2014 Changes

Published: 3 December 2014

George Osborne has finally listened to the calls of many to overhaul the stamp duty land tax "slab system" making it a progressive tax, much in the same way that income tax is.  Whilst this is good news for all buyers of property under ,500.00 it generally means an increase for anyone buying over this price.

NEW RATES FROM MIDNIGHT TONIGHT ARE AS FOLLOWS:

Residential Property
so much as does not exceed ,000                                                     0%
so much as exceeds £125,000- but does not exceed £250,000        2%
so much as exceeds £250,0001 but does not ,000                            5%
so much as exceeds £925,001 but does not exceed ,500,000          10%
The remainder above £1.5m if any                                                     12%

Commercial Property – remains unchanged

What does this mean for you?

Under the old rules, a house of £625,000 would be liable to 4% tax on the full amount -  ,000.00.  Under the new rules, for the same property you'll pay nothing on the first £125,000,  2% on the next £125,000 to £250,000, and 5% on the remaining £400,000.00. This works out at £21,250, a saving of ,750.00.

This is great news if you are buying a home for £937,500, or less – because you will pay less stamp duty or the same. However if you are buying a home above this £937,500  threshold you are likely to pay substantially more than under the old rules.  

have a useful calculator here so that you can check your own liability. This gives you "before" and "after" figures.

Here are some examples:

  •  A purchase of £1.5m will incur SDLT of £93,750, up from ,000  - a rise of ,750.00.
  • A purchase of £2m will incur SDLT of £153,750, up from £100,000  - a rise of £53,750.00. 
  • A purchase of £5m will incur SDLT of £513,750, up from ,000 -  a rise of ,750.00.
  • A purchase of £10m will incur SDLT  of £1,113,750 up from £700,000 -  a rise of £413,750.00
  • A purchase of £20m will incur SDLT of £2,313,750 up from £1,400,000 -  a rise of £913,750.00.

These changes will take effect on and after 4 December 2014. Transitional rules will allow buyers who have already exchanged on a home but not completed before 4 December 2014 to choose whether to pay SDLT under the old rules or new rules.

For more advice and information please contact Maria Guida, a partner in the Property Team.

The contents of this article are intended for general information purposes only and shall not be deemed to be, or constitute legal advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article.