Autumn Statement - Stamp Duty changes

by Joanna Staples, 03 December 2016

As from 4 December 2014, the way that Stamp Duty Land Tax is calculated on residential properties will change.

Previously known as Stamp Duty, Stamp Duty Land Tax (‘SDLT’) is paid by a Buyer to HM Revenue and Customs on completion of the purchase of their new home. 

Under the old system, a different rate of SDLT was payable on the whole purchase price, and the rate varied depending on the price being paid.

Under the new system, each SDLT rate will only affect the portion of the property price to which it applies.

The new SDLT rates are:-

  • No tax on the first £125,000 paid
  • 2% on the portion up to £250,000
  • 5% up to £925,000
  • 10% up to £1.5 million
  • 12% on everything above that

So, as an example, if you are buying a property for £400,000, under the old system the SDLT rate would have been 3% on the whole purchase price i.e. £12,000.

Under the new system, the SDLT will be calculated like this:       

  • The first £125,000 has a zero rate:   £0
  • The portion after £125,000 but up to £250,000 attracts 2%, so 2% of £125,000:   £2,500
  • The balance after £250,000 but up to £925,000 attracts 5%, so 5% of £150,000:   £7,500
  • Total SDLT payable under the new system:   £10,000

Although the calculation appears more complex at first glance, there are benefits for both Buyers and Sellers. A lot of Buyers will now pay less SDLT on their purchase, and Sellers will no longer have the issue of deciding whether to price themselves above or below the SDLT thresholds (£125,000, £250,000 and £500,000) to attract a Buyer.

If you have already exchanged on your purchase, you will be able to choose whether to pay your SDLT under the old system or under the new system provided your completion takes place on or after 4 December 2014.

If you have any queries as to the new SDLT Rate for residential properties, or how the changes might affect you, please do not hesitate to contact our Property team.

Author

Joanna Staples

Associate of the Chartered Institute of Legal Executives
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