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Stamp duty budget changes

Stamp Duty Reform: saving money on property purchases

In his Autumn Statement, the Chancellor announced the reform of Stamp duty on residential properties under £937,500, hoping to make the tax fairer for homebuyers, with immediate effect. As a result of the reform, according to the Treasury, 98% of homebuyers will enjoy a tax cut worth £800 million a year.

How to calculate which Stamp duty rule to use

  • If you exchanged contracts on or before 4 December, but are due to complete on or after that date, then you can choose between whether to use the old or the new rules;
  • If you exchanged and completed the sale of the property after 4 December you must pay Stamp duty under the new rules;
  • If you completed the purchase of your property on or before 3 December 2014, but did not file your Stamp duty return, then you must pay stamp duty under the old rules.
Stamp duty budget changes

Examples

Exchanged before 4/12/14

You exchanged on your £275,000 property on 2 December 2014 and can therefore choose whether to pay Stamp duty under the old rule or the new rule. Under the old rule, you pay 1% on the entire price of the property, which is £8,250; under the new rules, which work very much like the income tax system, you pay nothing on the first £125,000 and then pay duty at 2% on the remaining £150,000. This means that for the same £275,000 property you pay £3,750 in Stamp duty, making a tax saving of £4,500.

Completed before 3/12/14

You completed the purchase of your property for £275,000 on 3 December 2014, but did not file your Stamp duty return before 4/12/14. This means you must pay stamp duty under the old rules of £8,250.

Purchase price of property (£) New rates of Stamp duty according to banded system
0–125,000 0%
125,001–250,000 2%
250,001–925,000 5%
925,001–1,500,000 10%
1,500,001 and over 12%

Paying Stamp duty

You should file a Stamp duty return and pay what you owe within 30 days of completing the sale of your property.

You should still submit a return even if you do not owe anything in Stamp duty, unless you bought the property for less than £40,000.

On receipt of a valid Stamp duty return, HMRC issues a certificate so that you can register the title of your property with the Land Registry.

If you have any questions about stamp duty, filing a return, or how to maximise your tax saving, please get in touch with your account manager.

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