Stamp Duty Land Tax is to be changed at midnight after today’s Autumn Statement by Chancellor George Osborne.
Osborne announced that he would be completely reforming what he described as a “badly designed tax on aspiration”.
He has jettisoned the old “slab” structure, by which home buyers paid SDLT on the entire purchase price of the property. Instead, he has replaced it with a “progressive” structure which, he insisted, would benefit 98% of home purchasers.
The reforms will not, he told the Commons, affect those currently in the middle of house moving, who will be able to choose whether to pay SDLT under the old or new system.
Under the new reforms:
- No SDLT payable at all on properties up to £125,000
- The first £125,000 on properties to be free of SDLT
- Then payable at 2% payable on the portion up to £250,000
- Payable at 5% on the portion up to £925,000
- Payable at 10% on the portion up to £1.5m
- Then payable at 12% on the portion over that amount.
The Chancellor expects the SDLT reforms to cost if a total of £4.4bn in the next six years.
Savills’ calculations show the “pinch” point at being around the £1m mark, at which the new rate becomes a heavier burden on home buyers.
However, where purchasers bought at exactly the previous “slab” thresholds of £250,000 and £500,000, there will be no difference in the amounts payable.
The reform to SDLT was given a half-hearted welcome by Ed Balls, shadow chancellor, whose own party wants to introduce an annual Mansion Tax.
Balls said: “[The] measures aren’t enough – why not have an annual charge on the highest properties and fund a £2.5bn injection into the health services.”
* Source PropertyIndustryEye