A radical overhaul of stamp duty to boost the housing market has been announced in today’s Autumn Statement.
Chancellor George Osborne has said that 98 per cent of homeowners in England and Wales would pay less after the changes than they do under the current system.
The current system of a ‘slab’ single rate stamp duty tax on the entire property price will be replaced with a system of tax bands, like income tax.
The new rates will be:
Up to £125,000 : 0 per cent
£125,001 to £250,000 : 2 per cent
£250,001 to £925,000 : 5 per cent
£925,001 to £1.5m : 10 per cent
Above £1.5m : 12 per cent
From 4th December, the new rates of stamp duty will only apply to the amount of the purchase price that falls within the particular duty band, making it more like income tax.
So if you are buying a house for £200,000 you will pay nothing on the first £125,000, and then two per cent of the next £75,000, giving you a bill of £1500.
Previously you would have paid one per cent on the total purchase price, giving you a bill of £2,000. So, although the percentage rates appear higher in some cases, the overall charge will mostly be lower.
Mr Osborne said the system “replaces a badly designed system that has distorted our housing market for decades”.
He said the tax would apply “only when you buy a house and have the money”, as opposed to an annually levied tax, and claimed it was a “fair and equitable” tax on homes.
The government has created a stamp duty calculator to help buyers.