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Thursday, December 04, 2014

New stamp duty rates

The new stamp duty rates announced by George Osborne yesterday will mean most buyers will see a saving in their purchase costs.

According to the government calculations 98% of those buyers liable for stamp duty will see their charges reduced.

The 2% of buyers who will see an increase in stamp duty will be those buyers of property worth more than £932,000.

The new stamp duty rules will use a graduated approach, similar to the way income tax is calculated. A properties purchase price will be taxed via a banded system instead of the old flat rate.

Therefore, a property will see no tax payable for the first £125,000 of its price, then 2% on the value up to £250,000, followed by the subsequent bands below for properties of a greater value.

The bands of stamp duty are -

0 - £125,000 = 0%
£125,001 - £250,000 = 2%
£250,001 - £925,000 = 5%
£925,00 - £1,500,000 = 10%
£1,500,000 and over = 12%

The new rates come into play as of today - December 4th 2014.

My view

This appears a far fairer system than the old flat rates. It will avoid the sudden leaps in purchasing costs at the banded divisions.

Read the Treasury release on the reforms of stamp duty

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