As part of the Autumn Statement announced by the Chancellor on 3rd December 2014 there will be an overhaul of stamp duty land tax (SDLT), which had been under criticism preciously for unfairly penalising many buyers due to its ‘slab’ structure. The new system will be akin to the graduated structure of income tax, with only the proportion of the property’s value over a band to be taxed at that rate, rather than the entire sum of the home purchased.
Many people who are looking to buy or re-assign properties through JOHNS&CO may be concerned about how the new legislation may affect them so we want to provide our clients with a breakdown of the financial implications involved.
Under the new reforms, property purchases will be taxed as follows:
Up to £125,000: 0%
£125,001 to £250,000: 2%
£250,001 to £925,000: 5%
£925,001 to £1.5m: 10%
Above £1.5m: 12%
This means anyone purchasing a home under £925,000 will incur a lower rate of stamp duty than the previous system. However, buyers purchasing homes at a higher value than this will be adversely affected, as a tax equating to 10% of the sales price will be imposed. The introduction of this new tax is immediate.
HMRC has a useful tool to calculate the SDLT that will be required on a property under the new system and the graph’s above from Knight Frank Residential summarise the new charges.
If you are looking to purchase or re-assign a property through JOHNS&CO and are concerned about how the new tax structure will affect you, please do not hesitate to contact us on 0207 118 0200 or firstname.lastname@example.org