4 Dec

Government announces stamp duty changes

 Government announces stamp duty changes

George Osborne's latest Autumn Statement has seen a change in the way stamp duty will be applied.

The changes will be effective immediately and could bring financial rewards to the majority of homebuyers.

Prior to the surprise announcement, the tax was applied in a non-graduated way, with buyers seeing a jump in the amount payable at certain levels.

Under the new rules, the rates at different band levels will only apply to the part of the property price that falls within that band. This means there will no longer be a sharp rise in the amount paid.

Buyers will not have to pay tax on the first £125,000 of a property, followed by two per cent on the portion up to £250,000, five per cent on the portion between £250,000 and £925,000, ten per cent on the part up to £1.5 million and 12 per cent on anything over.

It is thought the changes could make it easier for people to purchase their first home by ensuring they have more money to put towards a deposit rather than having to pay a stamp duty bill.

Experts also feel the new stamp duty rules could bring benefits to those selling their homes as they will not have to adhere so strictly to the previous thresholds in order to achieve a sale.

"The new, graduated stamp duty system is a long overdue overhaul to what the chancellor admitted was a poorly designed tax and represents a fairer system for the vast majority of home buyers," explained Lawrence Hall of Zoopla.

"It also means that those selling their home at certain levels are more likely to achieve the real value of their homes and won’t be forced to discount their properties to sneak under certain bands."

However, the government could see a fall in revenue because of the changes. In 2013, it collected a total of £6.4 billion in stamp duty on UK house sales. The new rules could see a fall of around £760 million this year and £840 million in 2016 - despite an increase in the value of property.ADNFCR-1222-ID-801764277-ADNFCR

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