The Chancellor has announced a complete reform of stamp duty and abolished the existing slab structure. From now on, each rate will only apply to the part of the property price that falls within that band, similar to how income tax works.
The new rates will be:
No tax up to £125,000; 2% on property value from £125,000 to £250,000; 5% on property value from £250,000 to £925,000; 10% levy on property value from £925,000 to £1.5million; 12% on property value over £15million.
The new rates will be effective from midnight tonight. Anyone in the process of buying a home who has exchanged can choose to pay the new rates or old rates, said George Osborne when delivering the Autumn Statement.
The new rates will mean tax increases are more gradual rather than huge leaps in bills.
Under current rules:
The levy on property kicks in at £125,000 at a rate of 1%; it jumps to 3% of the property's price when it hits £250,000; buyers pay 4% when the property is £500,00; pay 5% at £1million; and 7% for properties priced at £2million and higher.
This means that a tax bill goes from 1% to 3% of the property's price after it hits the £250,000 mark taking a tax bill from £2,500 to £7,500.
Under new rules
A buyer of a property at £249,000 will pay £2,480 in stamp duty; a buyer of a property worth £250,000 will pay £2,500 in tax; and a buyer of a property worth £251,000 will pay £2,550. For more details please click here.
Disclosure: The author is long YHOO.