People buying homes will only pay the tax rate on the part of the property which falls within the band instead of paying it on the whole property price.
For homes up to £125,000 no stamp duty is payable then;
£125,001 to £250,000 – 2%
£250,001 to £925,000- 5%
£925,001 to £1,500,00- 10%
£1,500,001 and above 12%
Osborne referred to the old system as a ‘badly designed tax’ which placed the biggest burden on low and middle income families.
The new rules start tomorrow, on 4 December. People who have already exchanged contracts on their new home purchase but have yet to complete will get to choose whether they use the old or new rules.
In Scotland the new rates will apply until 1 April 2015 when the Land and Buildings Transaction Tax replaces it.
The Chancellor said that for a home which cost £255,000 the Stamp Duty charge would be £4,500 lower than it would have been under the old system.
Osborne said the new approach to calculating the tax removed the need to revalue the UK’s stock of homes.
The old rates were;
£125,001 to £250,000 – 1%
£250,001 to £500,000 – 3%
£500,001 to £1m – 4%
£1,000,001 to £2m – 5%
Over £2m – 7%.
Osborne said just 2% of the population would lose out under the new structure and rates.
He said someone buying a home worth more than £5m would now pay £514,000 in Stamp Duty compared to £350,000 previously.
To read the government’s factsheet on the new Stamp Duty Land Tax click HERE.
To see a list of changes which will be brought about by today’s announcement click HERE.
