Stamp Duty Land Tax is to be changed at midnight after today’s Autumn Statement by Chancellor George Osborne.
Osborne announced that he would be completely reforming what he described as a “badly designed tax on aspiration”.
He has jettisoned the old “slab” structure, by which home buyers paid SDLT on the entire purchase price of the property. Instead, he has replaced it with a “progressive” structure which, he insisted, would benefit 98% of home purchasers.
The reforms will not, he told the Commons, affect those currently in the middle of house moving, who will be able to choose whether to pay SDLT under the old or new system. Eye will get more clarity on this point, but we believe the Chancellor meant buyers who have exchanged but not completed.
We now have this vital clarification. https://www.gov.uk/stamp-duty-land-tax-rates
“Where contracts have been exchanged on or before 3 December 2014, and the transaction is completed on 4 December or later, you can choose whether you follow the new or the old rules.”
Under the new reforms:
- No SDLT payable at all on properties up to £125,000
- The first £125,000 on properties to be free of SDLT
- Then payable at 2% payable on the portion up to £250,000
- Payable at 5% on the portion up to £925,000
- Payable at 10% on the portion up to £1.5m
- Then payable at 12% on the portion over that amount.
The Chancellor expects the SDLT reforms to cost the Treasury a total of £4.4bn in the next six years.
Savills’ calculations show the “pinch” point at being around the £1m mark, at which the new rate becomes a heavier burden on home buyers.
However, where purchasers bought at exactly the previous “slab” thresholds of £250,000 and £500,000, there will be no difference in the amounts payable.
The reform to SDLT was given a half-hearted welcome by Ed Balls, shadow chancellor, whose own party wants to introduce an annual Mansion Tax.
Balls said: “[The] measures aren’t enough – why not have an annual charge on the highest properties and fund a £2.5bn injection into the health services.”