With George Osbourne delivering his autumn statement today it seems an appropriate time to revisit one of his big changes made this time last year. Namely stamp duty land tax reform.
Until this time last year stamp duty was nil to £125,000, 1% of the whole purchase price between over £125,000 and £250,000 and 3% of the whole purchase price between over £250,000 and £500,000 with even higher percentage taxes for higher priced properties. This caused great ‘glass ceilings’ as prices crept towards new brackets. For example someone buying a property for £249,000 would have paid £2490 tax, however, someone buying a property for £251,000 would have paid £7530. Clearly this distorted house prices somewhat around the £250,000 mark.
Since last year stamp duty has changed to nil to £125,000, 2% of the amount between over £125,000 and £250,000 and 5% of the amount between over £250,000 and £925,000 with higher percentage taxes charged on even more expensive homes. Therefore today a purchaser buying at £251,000 would pay £2550. A big change from the previous £7530! Even better than that a buyer at £130,000 would only pay £100 as opposed to £1300 previously.
Although met with some controversy at the time these changes has made the stamp duty system more forgiving and it has helped smash the glass ceilings that the old system created.