Stamp duty cut for 90 per cent of London homebuyers

Dec 3, 2014

The chancellor George Osborne said today that the current system of stamp duty will be cut for 90% of London homebuyers in his Autumn Statement to the Commons. The stamp duty reform comes in at midnight and will mean a cut for 90 per cent for the majority but big rise for homes over £2m. Christian Harper of Chiswick estate agent HarperFinn: “The stamp duty reform is the most significant tax and spending measure announced today. The change makes a cheaper property more affordable and a pricier one more expensive.”

In the middle of buying or selling a Chiswick property?

Although the new stamp duty regime comes into force at midnight, the people in the process of purchasing will not be affected said Mr Osborne. “If you have exchanged contracts, but not completed the deal by midnight tonight, you will be able to choose whether to pay under the old system or the new, so no one in the middle of moving house will lose out."

The system where the amount owed jumps at each threshold level will be replaced by a graduated rate, similar to income tax. Each tax rate (and there are new ones) will apply only to the particular price band to which it applies, not the whole value of the property (as before). Stamp duty rates by selling price:

No tax on the first £125,000 paid
2% on the portion up to £250,000
5% up to £925,000
10% up to £1.5 million
12% on everything above that.

Impact on London property

For a typical £510,000 house in London – a fall of £4,900 — from £20,400 to £15,500.
A £1 million property – a rise of £3,750, from £40,000 to £43,750.
A £2 million property – a rise of £53,750, from £100,000 to £153,750.
For a £5 million home – a rise of £163,750, from £350,000 to £513,750.

Impact on your property There is a new calculator for residential property transactions effective from 4 December 2014. The HM Revenue and Customs (HMRC) calculator also displays tax due under the previous rules.