Re: | Page 90

reform Stamp Duty you would be liable for a SDLT payment of £7,530.00, a difference of over £5,000.00. This was problematic for sellers as well as buyers. A home with a value of just over a threshold would often sell for less as buyers were simply not prepared to take the drastic hit to the pocket. What’s changed? If you’re buying at a low price, then not very much has changed. There will still be no tax on purchases up to £125,000. In fact, the first £125,000.00 of any purchase will not be taxed at all, and the following bands will now be more proportionate:• 2% on the portion up to £250,000 • 5% on the portion up to £925,000 • 10% on the portion up to £1.5 million • 12% on everything above that. This means that now if you were to buy at £249,000.00, your SDLT fee would be £2,480.00 as you are paying 2% of the value of anything upward of the £125,000.00 threshold. Chancellor George Osborne’s Autumn Statement brought with it a surprise reform to the way Stamp Duty Land Tax is payable – and it all changed last December. The reform means that lower fees will now be payable for the majority of buyers, taking some financial strain away from what can be an extremely expensive experience. This follows the Help-to-Buy scheme in the Government’s efforts to make it easier for the first-time buyer to get their foot on the property ladder. Stamp Duty Land Tax (SDLT) is the current tax paid by buyers when they purchase a proper ty, whether it be for residential or buy-to-let properties, and has long been a point of contention 88 due to the ‘slab structure’ of payment. This means that a buyer would pay a percentage of the worth of their new home according to which band the price fell into. Therefore, considerable increases would occur if your property fell into a band just £1.00 higher than the one below. How did it work? Stamp Duty was not payable if you were buying a property for less than £125,000, but after that there were five bands: •  etween £125,001 and £250,000 – 1% B of the value of the property; •  etween £250,001 and £500,000 – B 3%; •  etween £500,001 and £1m – 4%; B • Between £1m and £2m – 5%; • Above £2m – 7%. This would mean that to purchase a property at £249,000.00, you would incur a fee of £2,490.00. However, jumping the threshold and buying at £251,000.00, This may not seem like a large difference, but it could mean a lot if your seller is not willing to accept an offer lower than £251,000.00. In this instance, your SDLT liability would now become £2,550.00 (a huge reduction from the previous £7,530.00 fee) as you are paying the 2% up to £250,000.00 and 5% of the £1,000.00 remaining. Does the new system work for me? According to the Treasury, the answer is yes for about 98% of households. However, anyone spending over £937,000 faces a higher bill. The HMRC has added a handy online calculator if you would like to see how this change may now affect your upcoming purchase (or in some cases, torture yourself over a recent high Stamp Duty Payment) go to: www.hmrc.gov.uk/tools/sdlt/land-andproperty By Sinead McGeady