Saturday
20
April
Welcome for Stamp Duty changes
08/12/2014 @ 07:51
The Stamp Duty regime reforms of the Autumn 2014 Budget have been welcomed by local property solicitors Harrisons.
Sian Davies of Harrisons commented on the new system: "The changes to the way that Stamp Duty is calculated will mean that 98% of house buyers who pay stamp duty land tax will be better off.
"The new regime comes into effect on 4th December, 2014. Previously no Stamp Duty was payable on properties sold up to £125,000. Stamp Duty was payable at 1% on properties sold for between £125,001 and £250,000 and at 3% on properties sold for in excess of £250,000
"The previous system charged Stamp Duty at a single rate on the whole purchase price of a property eg on a property sold for £150,000 stamp duty of £1,500 would have been payable and on a property sold for £300,000 stamp duty of £9,000 would have been payable.
"The rate increased in bands which resulted in distortions in the sale prices of many properties at or around £125,000 and £250,000 because many properties worth in excess of these figures would be down valued to compensate for the Stamp Duty payable.
"Under the new system, as before, no tax is payable on properties sold for up to £125,000. Stamp Duty is now payable at 2% on properties sold for between £125,001 and £250,000 and at 5% on properties sold for in excess of £250,000 however the new regime adopts a tiered system where Stamp Duty is only paid on the portion of the purchase price that falls into each taxable band.
"For example on the property sold for £150,000 Stamp Duty of £500 instead of £1,500 will be payable ie no tax on the first £125,000 and at 2% on £25,000.
"This will be a boost to first time buyers who struggle to find the up front costs associated with getting on the first rung of the property ladder, and on the property sold for £300,000 Stamp Duty of £5,000 instead of £9,000 will be payable ie no tax on the first £125000, at 2% on £125000 and at 5% on £50000.
"Transitional rules will apply to house buyers who had exchanged contracts but not completed their purchase before the 4th December and they can choose to pay Stamp Duty under the old or the new system.
"The Government hopes that these changes will bring about a fairer system of taxation on property purchases and will end anti tax avoidance schemes that some buyers and sellers fall foul of when trying to negotiate the sale of properties close to the change in the Stamp Duty band rates.
"The majority of people who pay tax when they buy a property will now pay less stamp duty land tax and that can only be a good thing for the local property market.”
Sian Davies of Harrisons commented on the new system: "The changes to the way that Stamp Duty is calculated will mean that 98% of house buyers who pay stamp duty land tax will be better off.
"The new regime comes into effect on 4th December, 2014. Previously no Stamp Duty was payable on properties sold up to £125,000. Stamp Duty was payable at 1% on properties sold for between £125,001 and £250,000 and at 3% on properties sold for in excess of £250,000
"The previous system charged Stamp Duty at a single rate on the whole purchase price of a property eg on a property sold for £150,000 stamp duty of £1,500 would have been payable and on a property sold for £300,000 stamp duty of £9,000 would have been payable.
"The rate increased in bands which resulted in distortions in the sale prices of many properties at or around £125,000 and £250,000 because many properties worth in excess of these figures would be down valued to compensate for the Stamp Duty payable.
"Under the new system, as before, no tax is payable on properties sold for up to £125,000. Stamp Duty is now payable at 2% on properties sold for between £125,001 and £250,000 and at 5% on properties sold for in excess of £250,000 however the new regime adopts a tiered system where Stamp Duty is only paid on the portion of the purchase price that falls into each taxable band.
"For example on the property sold for £150,000 Stamp Duty of £500 instead of £1,500 will be payable ie no tax on the first £125,000 and at 2% on £25,000.
"This will be a boost to first time buyers who struggle to find the up front costs associated with getting on the first rung of the property ladder, and on the property sold for £300,000 Stamp Duty of £5,000 instead of £9,000 will be payable ie no tax on the first £125000, at 2% on £125000 and at 5% on £50000.
"Transitional rules will apply to house buyers who had exchanged contracts but not completed their purchase before the 4th December and they can choose to pay Stamp Duty under the old or the new system.
"The Government hopes that these changes will bring about a fairer system of taxation on property purchases and will end anti tax avoidance schemes that some buyers and sellers fall foul of when trying to negotiate the sale of properties close to the change in the Stamp Duty band rates.
"The majority of people who pay tax when they buy a property will now pay less stamp duty land tax and that can only be a good thing for the local property market.”
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