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Stamp Duty Reform - how will it effect your purchase?

Stamp Duty Reform - how will it effect your purchase?

The chancellor has announced a long awaited reform to the way that property buyers pay Stamp Duty.  The net effect of the new system that comes into force for transactions that exchange after midnight on the 3rd December 2014 will a saving for those purchasing between £250,000 and £925,000 and an increase for those transactions above.

The bands have been replaced with a tiered system as follows:  

Purchase price of property (£)                    New rates paid on the part of the property price within each tax band
0 - 125,000                                                     0%
125,001 - 250,000                                           2%
250,001 - 925,000                                           5%
925,001 - 1,500,000                                        10%
1,500,001 and over                                         12%

The effect of this is that a purchase price of £260,000 would have paid 3% on the whole at £7,800.  Under the new system that comes into force from 4th December the tax payable would be 0% on the first £125,000, 2% on the next £125,000 (£2,500) and 5% (£500) on the final £10,000 a total of £3,000.  

On a purchase price of £550,000 0% on the first £125,000, 2% on the next £125,000 (£2,500) and 5% the remaining £300,000 (£1500) a total of £17,500 as opposed to £22,000.  

On a purchase price of £1,000,000 0% on the first £125,000, 2% on the next £125,000 (£2,500) and 5% on £675,000 (£33,750) and 10% on the remaining £75,000 (£7,500) a total of £43,750 as opposed to £40,000.

 

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