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Dramatic changes to Stamp Duty System

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Wed 03 Dec 2014

Dramatic changes to Stamp Duty System

Martin Maslins have today learnt of the bold move made by the Chancellor George Osborne in respect of a new Stamp Duty system. It is a move which we believe can provide a springboard to a more buoyant market in the New Year following an active end to 2014. Read more below in an article taken from the Daily Mail.

George Osborne today dramatically announced he is scrapping the hated stamp duty 'slab' system in a bold move to increase home ownership.

The Chancellor said he was on the side of people who want to get on the property ladder.

The changes will come into effect from midnight tonight, and 98 per cent of property sales will become cheaper as a result.

Instead it will raise more money from multi-million pound property transactions, in a move aimed at demolishing Labour's calls for a mansion tax.

Critics of the current 'slab' system say it distorts the market because it suddenly jumps up.

Under the old system the headline rate of stamp duty was imposed on the entire amount.

So a property costing between £125,000 and £250,000 was charged at 1 per cent of its value, but over the £250,000 threshold it suddenly jumped to 3 per cent.

With the new system, only the amount above £250,000 will be taxed at the higher rate. 

It will end the long-standing problem of people struggling to sell homes at values just above each threshold. 

It means any home sold for less than £937,500 will cost less in stamp duty than under the old system. 

Homes worth less than 125,000 will continue to carry no stamp duty at all.

Anyone buying a home worth between £125,001 and £250,000 will have to pay 2 per cent in tax.

On houses worth between £250,001 and £925,000, they will pay 2 per cent on the slice from £125,001 and £250,000 and then only 5 per cent on the amount between £250,001 and £925,000.

The value of a property between £925,001 and £1.5million will be taxed at 10 per cent, and on more than £1.5million it will rise to 12 per cent tax.

Only homes that cost over £937,000 will see their bill go up. A £5 million pound house will see its stamp duty rise from £350,000 to £514,000. 

Mr Osborne said: 'The system I introduce today replaces a badly designed system that has distorted our housing market for decades.

'It reduces the stamp taxes for 98 per cent of people who pay them in this country. It increases the taxes on the most expensive 2 per cent of homes, but only asks people to pay that tax when they buy the house and they have the money.

'And it does not involve a revaluation of hundreds of thousands of homes in this country.’

Article has been taken from www.dailymail.co.uk