Yesterday, the Chancellor of the Exchequer announced radical changes in the paying of Stamp Duty in his Autumn Statement. These changes came into effect immediately from midnight last night and for those of you already going through the procedure of buying a property, if you have exchanged contracts but not yet completed the purchase, you will be able to choose whether you wish to pay using the old system or go with the new system. This newly introduced system is banded and works along similar lines to income tax; the rates apply only to the part of the property price that falls within each band when it is purchased. So how will it affect you?
As from today, the following will apply:
(1) No Stamp Duty will be paid on the first £125,000 of a property
(2) 2% Stamp Duty will be paid on the portion up to £250,000
(3) 5% Stamp Duty will be paid for the portion up to £925,000
(4) 10% Stamp Duty will be paid for the portion up to £1.5 million
(5) Any amount over £1.5 million will be subject to Stamp Duty at an applicable rate of 12%
Under the old system, Stamp Duty was calculated as a percentage of the total property price, so purchasing a property for £250,000 would have incurred additional charges of £2,500(1%). However, if the property in question was as little as a penny more than this threshold, the purchaser would have been expected to triple this to a 3% levy. The new system will hopefully, go a long way to helping purchasers and assisting in giving the housing market another kick start.