The chancellor has said that from 4 December 2014 the system would be replaced by a graduated rate.
The new stamp duty rates at different band levels will only apply to the part of the property price that falls within that band, so there will no longer be a huge jump in stamp duty, for instance, on a property costing £500,001.
Under the new rules, no tax will be paid on the first £125,000 of a property, followed by 2% on the portion up to £250,000, 5% on the portion between £250,000 and £925,000, 10% on the next bit up to £1.5 million and 12% on everything over that.
People currently in the process of purchasing a home could choose which regime to operate under.
So what are the changes?
There will still be no tax on purchases up to £125,000.
Above that there will be several bands:
• Between £125,001 and £250,000 the rate will be 2%
• Between £250,001 and £925,000 the rate will be 5%
• Between £925,001 and £1.5m the rate will be 10%
• Above £1.5m the rate will be 12%.
Example;
- On a £180,000 house purchase there will be no tax to pay on the first £125,000, then 2% on the remaining £55,000, which is a total bill of £1,100, versus £1,800 before the changes.
- On a £300,000 house purchase there would be no tax to pay on the first £125,000, then 2% on the next £125,000 (£2,500) and 5% on the last £50,000 (£2,500). That’s a total £5,000 compared with £9,000 under the previous system.