In his autumn statement, George Osborne, Chancellor of the Exchequer has announced that stamp duty will be cut for 98% of home buyers and that only the highest value residential properties will pay more.
From midnight, the current slab system, where the amount jumps at each threshold level, will be replaced by a new graduated rate system. This will work in a similar way to income tax.
This will be welcome news for the majority of home buyers across the country as the former system imposed unfair increases, especially on home buyers who were unfortunate enough to pay just £1 over the threshold.
Under the new regime, no tax will be paid on the first £125,000 of a property, followed by 2% on the portion up to £250,000, 5% up to £925,000, 10% up to £1.5 million and 12 % on everything over that.
What do these changes mean for home buyers?
|House Price||Stamp Duty – old regime||Stamp Duty – new regime|
Is this good news for everyone?
High value home buyers (over £937,000) will feel the effects of the new regime, whereas property under the £937,000 bracket will immediately benefit.
Speaking from parliament today, George Osborne said;
Today I’m cutting stamp duty for millions of homebuyers in this country. It is a fair, workable, lasting reform to the taxation of housing.
So what does this mean for the economy?
In 2013-14 the Treasury took £6.45 billion from stamp duty which was an increase of 74% compared to a decade earlier, despite there being fewer house sale completions.
The chancellor has said that the new regime would represent a tax cut of £800 million a year. If house market conditions stay the same, the Treasury would see a 13% decrease.
In a package of changes announced today, Mr Osborne described the measures as a tightening of public finances rather than a net giveaway.
Mr Osborne said;
The government had inherited an economy on the brink but said the deficit was half what the government had taken on. It’s falling this year and every year, warning lights are flashing over the global economy.
Danny Luke, Business Manager at Quick Move Now says;
It’s great that the government have updated what was a very unfair, clunky stamp duty system. The new regime will mean savings for the majority of UK home buyers; however, I worry what this means for the UK’s deficit moving forwards.