UK Stamp Duty changes – the winners and losers
Property commentators in the UK believe a majority of homes located in places such as the London commuter belt and some of its cheaper boroughs will be significant winners, following the changes to UK Stamp Duty Land Tax announced by the UK chancellor George Osborne in the 2014 Autumn Statement.
The changes mean stamp duty land tax (SDLT) on property transactions moves from a structure which levied a flat rate on the total sale price to a system charging progressively higher rates above certain thresholds. From 4 December 2014, SDLT for residential property is now charged at different rates depending on the portion of the purchase price that falls within each rate band.
Lower-priced markets in the southeast of England that are within commuting distance of London have the highest proportion of homes that will benefit, according to an analysis carried out for the Financial Times by Hometrack .
According to the Financial Times, research carried out by Hometrack showed properties priced at £275,000 to £350,000 will see the biggest cuts in stamp duty relative to their value. A swath of areas in outer London and the commuter belt have the highest proportion of homes in this price bracket. Newham, in east London, will benefit the most, with notable gains also occurring in areas such as Slough and Crawley.
The top end of the London market is set to suffer most from the stamp duty reform. Whilst stamp duty will cost less for all buyers of homes worth under £937,500, those buying homes at £1.1 million and above will now have to pay more in tax.
The new residential land or property SDLT rates and thresholds
Purchase price of property
|Rate of SDLT|
|Up to £125,000||Zero|
|Over £125,000 to £250,000||2%|
|Over £250,000 to £925,000||5%|
|Over £925,000 to £1.5 million||10%|
|Over £1.5 million||12%|
If a buyer exchanges contracts for the purchase of a house for £275,000 under the new rules, SDLT is now calculated as follows:
0% on the first £125,000 = £0
2% on the next £125,000 = £2,500
5% on the final £25,000 = £1,250
Total SDLT payable = £3,750
Prior to the changes, the tax would have been payable at a flat rate of 3% in the above example, giving a tax bill of £8250. International and expat mortgage clients buying in the UK will also benefit from the changes. Guy Stephenson, a spokesman for international expatriate mortgage brokers Offshoreonline.org said, “With most expatriates buyers looking for UK homes and expat mortgages in the lower price ranges, all should welcome these changes which should bring about significant tax savings.”