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Stamp duty cut for most home sales

The Chancellor's Autumn Statement announced a major reform of Stamp Duty Land Tax (SDLT) for residential property transactions. With effect from 4 December, the structure, rates and thresholds are being changed to deliver a more efficient and fairer system.

The new rates are set out below and apply where purchases are completed on or after 4 December 2014.  Each new SDLT rate will only be payable on the portion of the property value which falls within each band (rather than tax being due at one rate on the entire property value).

Transitional rules apply where contracts are exchanged before 4 December but the transaction completes on or after that date.  In that situation, buyers will be able to pay stamp duty under the old rules or the new rules, whichever is more beneficial for them.

Key points:

  • This is a move from a "slab" to a "slice" system.
  • Changes take effect for transactions completing on or after 4 December 2014 (with transitional rules for those who exchanged contracts before that date)
  • The reform affects residential property transactions only.  Commercial property transactions are unaffected.
  • SDLT will be cut for 98% of people who pay it and everyone buying a house for up to £937,500 will pay less or the same SDLT as under the current system.
  • The new rates will apply to homes purchased in Scotland until 31 March 2015.  After this date the Land and Buildings Transaction Tax (LBTT) replaces SDLT in Scotland.

Under the new rules, tax will be charged at a marginal rate on each slice of the consideration for a transaction:

  • 0% on any amount up to £125,000
  • 2% on any amount over £125,000 up to £250,000
  • 5% on any amount over £250,000 up to £925,000
  • 10% on any amount over £925,000 up to £1,500,000
  • 12% on any amount over £1,500,000

Mr Osborne said "As a result, stamp duty will be cut for the 98% of homebuyers who pay it."

Please click here for the HMRC's calculator for stamp duty:

If you have any query about how these changes affect you, please call our property team on 01926 491181.

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