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Stamp Duty Reforms – Good News For Homebuyers

March 16, 2016

As of 4th December 2014 the government has cut stamp duty for 98% of homebuyers in the UK. The new fee structure for stamp duty resembles the current income tax structure. Instead of paying a flat rate for the whole purchase price, you will now only have to pay a percentage of stamp duty for the part of the purchase price that falls within that tax band.

For example, if your purchase price is £130,000, under the previous stamp duty regime, you would have paid stamp duty at a rate of 1% of £130,000 for a total of £1,300. With the new pricing structure, you would pay nothing on the first £125,000, and then 2% of the remaining £5,000 for a total of £100. As you can see, this new rate of stamp duty can save new homebuyers thousands of pounds. In fact, according to statistics the average savings to UK homebuyers is £4,500.

The new structure works on a rolling basis, so for example, if your purchase price is £260,000, you will pay 0% on the first £125,000, 2% on the next £125,000, and finally 5% on the remaining £10,000 for a total of £3,000 (you would have paid £7,800 under the old rules).

The way you pay stamp duty has not changed. Solicitors can still complete the stamp duty return form and submit this to HMRC on your behalf, keeping the home buying process as stress-free as possible.

The new stamp duty rates are as follows:

Purchase price of property in £

Stamp Duty rates

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%

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