The new rates are as follows:
- 0% tax on the first £125,000 paid
- 2% on the £125,001 – £250,000 portion
- 5% on the £250,001 – £925,000 portion
- 10% on the £925,001 – £1.5 million portion
- 12% on over £1.5 million
The current rates are as follows:
- 0% upto £125,000
- 1% between £125,001 to £250,000
- 3% between £250,001 to £500,000
- 4% between £500,001 to £1,000,000
- 5% between £1,000,001 to £2,000,000
- 7% between £2,000,001 and above
Osborne indicates the changes in stamp duty will result in a cut for 98% of homebuyers who pay it. He also claimed that only homes that cost just over £937,000 will see their stamp duty bill go up under this system.
Winners at the lower end of the market:
With a typical house price of £130,000 under the current rates buyers would have too pay £1,300, but from midnight tonight this will be £100.
Losers at the top end of the market:
For those properties at the more affluent end of the market, they will taxed more than previously with a typical £2.1m home costing £147,000, but this will increase to £165,750.
With the biggest change being each tax rate will apply only to the particular slice of the selling price to which they apply, not the whole value of the property (as at the moment).
While Osborne says that the new rates will see the majority of property buyers save money, the tax of 12% on the most expensive properties (over £1.5 million) is significantly higher than the 7% on properties over £2 million previously in place.
The changes will incur the biggest cost out of all those proposed in the Autumn Statement, costing the treasury up to £730m of lost tax next year, the Office for Budget Responsibility has calculated.
Anyone in the process of buying or selling a house that have exchanged contracts but not completed the deal by midnight tonight, it’s confirmed that they will be able to choose whether to pay under the old or new system, so no one in the middle of moving house will lose out.
What are your thoughts on these changes?