Chancellor George Osborne announced that when the clocks hands ticked over into the 4th December the much criticised tax transformed into a “progressive tax”, which should certainly benefit the majority of people who will now pay less tax under the new system, ranging from a few hundred to several thousands of pounds. It has also removed the barriers which held back properties whose true values were marginally over the previous thresholds meaning they can now get their actual worth.
I also expect that this major modification will halt the need for the controversial ‘Mansion Tax’ that has cause uncertainty in the property for some time.
Under the old system, Stamp Duty was calculated as a percentage of the whole property price and rose at various trigger points…
Up to £125,000
£125,000.01 - £250,000
£250,000.01 - £500,000
£500,000.01 - £1,000,000
£1,000,000.01 - £2,000,000
For example, £2,500 was levied in Stamp Duty when a property was bought for £250,000. However, the bill tripled when buyers paid just a penny more for a property.
The Chancellor’s announcement made a significant change to the way Stamp Duty will now be levied and the new method will mean that, in the same way as income tax, rates apply only to the part of the property price that falls within each band when it is bought, meaning…
No stamp duty will be paid on the first £125,000 of a property
2% will be paid on the portion up to £250,000
5% is paid for the portion up to £925,000
10% is paid on the portion up to £1.5m
12% is paid on anything above that
The new rules took effect from 4th December but anyone in the throes of buying a property, having exchanged contracts already but not completed, can choose whether to use the old or the new system.
Helpfully, a Stamp Duty calculator has been created by HM Revenue and Customs, so to see how it could affect you please click on the link…
The other matter - from another part of his Autumn Statement, and something I’m more than happy about - is that The Chancellor also announced that those who are non-domiciled will now face new charges, i.e. those who live in the UK long-term but are not resident for tax purposes will face an increased bill for living here, essentially meaning that…
Those who have been in the UK for 12 of the last 14 years will have to pay £60,000 a year.
Those who have been resident for 17 of the past 20 years will have to pay £90,000 a year.
Other non-doms will continue to be charged £30,000 a year, while only paying tax on money earned or brought into the country.
Good work, George!