Stamp Duty Changes: All you Need to Know

*This information is applicable in England, Wales, and Northern Ireland. In Scotland there is the Land and Building Transaction Tax, which differs slightly.

Stamp Duty, another one of the ever growing additional costs of buying your own home. It’s been around since 1694, and it isn’t going anywhere soon. 

With it becoming more and more difficult for first time buyers to front the costs of buying a home, some recent changes have been announced to try and lessen the burden.

Before you can understand the changes, we must first establish the basics. So first things first, what is Stamp Duty?

Stamp Duty is a tax on any property, to be paid upfront when purchased. The amount of Stamp Duty payable is a percentage that is worked out based on the value of the property. The higher the price, the higher the Stamp Duty.

On November 22nd 2017, however, changes were announced in a bid to encourage more first time buyers.

The new changes could make it a more realistic concept to buy your first home.

The Old and the New

 

The old system meant that everyone had to pay Stamp Duty on any property costing £125,000 or above. Starting at 2% of the value, rising up to 12% depending on the cost of the property.

So, if you were buying a property costing £223,807 (the average UK house price), you would pay 0% for the first £125,000, then 2% for the remaining £98,807. You would have to pay £1,976.14 in Stamp Duty.

Under the new changes, first time buyers would pay £0 Stamp Duty in this situation.

Although a saving of £1,976 doesn’t seem like a huge one in the grand scheme of things, it is a helpful saving and a step towards cutting upfront costs down.

“When we say we will revive the home-owning dream in Britain. We mean it.”
-Philip Hammond, during his announcement of the Stamp Duty changes

The new Stamp Duty rates for first time buyers are as follows:

Up to £300,000 0%
Up to £500,000 5% (The first £300,000 is still 0%)
Above £500,000 5%
Above £925,000 10%
Above £1.5 million 12%

These rates are different if you are not a first time buyer, then change again if you are buying a second home.

It’s a complicated system to navigate, and the changes are a step in the right direction.

 

If you need any advice about this feel free to contact us. Or, if you’d like to save time and see how much Stamp Duty you may be eligible to pay, take a look at our Stamp Duty Calculator.


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