Savings for many on Stamp Duty!

 

The chancellor has ended the “slab structure” for stamp duty land tax and replaced it with a progressive regime. Under the old system, which netted the Treasury £6.45bn last year, the entire cost of a property was taxed according to the highest band it fell into; there were sharp increases at each threshold. The “cliff edge” was particularly unpopular at the level of £250,000, where a rate of 3% kicked in, which meant that while a home costing £249,000 attracted duty of just £2,490, anyone spending £251,000 faced a tax bill of £7,530.

The new system, which is structured in the same way as income tax, will mean there are no big leaps in duty and house sales will no longer cluster just under each of the thresholds.

In a move he said would benefit 98% of home buyers and save £4,500 on the average house price of £275,000, Osborne added new thresholds and rates above the £125,000 level at which the tax bites.

Now home buyers will pay 2% duty on any costs from £125,001 to £250,0001, a rate of 5% on any portion between £250,001 and £925,000, 10% on the next chunk up to £1.5m, and 12% on any cost above that. In a strange quirk, buyers paying between £1m and £1.1m on a home will also be better off after the change.

The chancellor told MPs: “In recent years the burden of stamp duty has increased on low- and middle-income families trying to buy a new home, as prices have risen. This makes it even more difficult to get together the cash deposits buyers need. It’s time we fundamentally changed this badly designed tax on aspiration.

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