The Chancellor’s Autumn Budget Statement announced radical reform to how stamp duty is calculated for residential home buyers. This change to a fairer system has been welcomed by many, including the Royal Institute of Chartered Surveyors (RICS).
The old system was often described as working on a “slab” basis and created distortions in the housing market because it favoured those buying properties at the top of a tax rate band.
The new system is fairer because for the majority of house buyers it’s a cheaper system because they only pay tax on the proportion of the property within a relevant tax band.
The new tax Stamp Duty Land Tax (SDLT) rates are as below:
To help demonstrate the impact for different homebuyers the following table may help:
This new system will give a smoother housing market and avoid false ceilings in property prices at the each change in taxation. For example, a house buyer would have previously been reluctant to pay £1 over the £250k tax band as it would have incurred stamp duty of £7,500, whereas now the additional stamp duty for that same £1 increase is only an extra 5p.
If you or anyone you know are concerned about how the new tax rules will impact on you, please contact Platinum so we can help.