George Osborne says a fairer Stamp Duty system is replacing current "badly designed" rules – he claims 98% of buyers will pay less. But how much better off could you be if you moved house?
:: What Is Stamp Duty?
Officially called Stamp Duty Land Tax, it has to be paid on most purchases of houses, flats and other land and buildings.
:: How Did The Old System Work?
Buyers would simply pay a fixed percentage on the purchase price based on the brackets below.
- Up To £125,000 – 0%
- £125,000 - £250,000 – 1%
- £250,000 - £500,000 – 3%
- £500,000 to £1m – 4%
- £1m to £2m – 5%
- £2m or more – 7%
:: Was It Unfair To Buyers?
Some criticised this "cliff edge" system.
For instance, if someone was buying a house for £250,000 they would pay 1% (£2,490) on the whole value.
But, if they were perhaps tempted by a slightly more expensive house for £250,001, then the 3% rate would kick in.
They would be have to pay £7,530 - more than £5,000 more.
:: How Does The New System Differ?
The "cliff edge" system has been scrapped.
Buyers will no longer be hit with sudden jumps in Stamp Duty when their house edges into a new price bracket.
It will be far more gradual, with buyers taxed in 'chunks'.
:: This Is How It Works…
The first £125,000 of a property's value is tax free.
The chunk between £125,000 and £250,000 is taxed at 2%.
And then 5% tax is due on any value between £250,000 and £925,000.
Buyers must pay 10% on the chunk between £925,000 and £1.5m.
Any value above £1.5m is taxed at 12%.
:: Will The New System Really Save Me Money?
The Chancellor says if you are buying a property that is under £937,000 you will pay less
Any more than that then you're a loser - and will have to pay more.
:: How Much Cash Could I Save?
Property value:
- Up To £125,000 – No change: £0 to pay.
- £185,000 – Old system - £1,850; New system - £1,200. Saving = £650
- £275,000 – Old system - £8,250; New system - £3,750. Saving = £4,500
- £510,000 – Old system - £20,400; New system - £15,500. Saving =£4,900
- £2.1m – Old system - £147,500; New system - £165,750. Loss = £18,750
Try other values using the Government's Stamp Duty Calculator
:: When Do The Changes Come In?
Midnight on Wednesday, 3 December 2014.
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