What is it?
Stamp duty land tax is the tax you have to pay when you purchase a property worth over £125,000. This applies to purchases of freehold and leasehold properties as well as purchases through shared ownership and a share in a house.
It applies to everyone in England, Wales and Northern Ireland (in Scotland it’s called Land and Building Transaction Tax, which the rates differ for).
What are the rates?
The new system has been designed to help first time buyers get onto, and stay on, the property ladder. See below for a breakdown of the new rates:
£0-£125,000 – 0%
£125,001-£250,000 – 2%
£250,001-£925,000 – 5%
£925,001-£1,500,000 – 10%
£1,500,001+ – 12%
The percentages are indicative of the proportion of the difference you pay between the thresholds instead of the entire price of the property you are purchasing. For example, if you purchase a property worth £200,000 you would pay 2% of £124,999 because that is the difference between the thresholds. So, a property price of £200k would cost you £2500.
These rates saves homeowner’s significant amounts. For example, previously, where a home would cost £300,000, the owner would have had to have paid 3% of the whole purchase – £9000. Now, that would cost £5000.
If you're unsure about how much stamp duty you're going to have to pay, CLICK HERE, for an easy to use stamp duty calculator.
What are the negatives?
As with any good thing, there are downsides. If you’re an investor, either a current landlord or someone looking to invest, you’re going to get stung.
Because the idea behind these changes is to assist first time buyers, George Osborne is trying to deter property investors from adding to their portfolio. He has done this by putting a 3% increase on stamp duty for ownership of additional properties. If you’re wondering whether this idea of his will actually work, in a recent poll of over 1000 buy to let landlords, 53% stated they would not be purchasing anymore buy to let properties. Only 7.6% said the changes would not alter their plans. Furthermore, the tax will apply for properties worth over just £40,000 instead of £125,000.
These changes will be implemented in April 2016.
We understand this information is concerning to those of you that are keen in investing and we at Belvoir have solutions that can ensure your continuance to do so.
You can call our office on 028 9022 8409 to arrange a meeting with Andrew who will happily give you some viable options over a wee cup of tea or coffee.