The big surprise of the Autumn Statement this year was the changes made to stamp duty which benefit the masses and penalise those purchasing with larger budgets.
In blatant plagiarism of the new Scottish system introduced in October to take affect in April
The changes became effective at midnight and the main change is that instead of having a slab system, whereby you pay a different percentage depending on the price of the property, now no-one pays anything on the first £125,000 and different amounts thereafter.
The bands for residential property are as follows:
£0 – £125,000 no charge
£125,001 – £250,000 2%
£250,001 – £925,000 5%
£925,001 – £1.5m 10%
Over £1.5m 12%
Under the old system, a buyer of a property for £5 million would have paid 7% or £350,000 in stamp duty land tax. Under the new system the tax would jump to £513,750. Even buying at £1 million adds more tax as £43,750 is payable, whereas previously it would have attracted just £40,000.
Note that stamp duty on mixed use and commercial property is still capped at 4% which means buying commercial property which is often sold at a cheaper price per square foot than residential property, is even more worthwhile.
Also, the rates above will also apply in Scotland until the Scottish rates change on 1st April 2015 to the new Land and Buildings Transaction Tax. The bands will be as follows:
£0 – £135,000 no charge
£135,001 – £250,000 2%
£250,001 – £1,000,000 10%
Over £1,000,000 12%