Autumn Statement: What it means for Homebuyers
People buying a home in the UK will feel the direct impact of announcements in the Autumn Statement
The Autumn Statement is always the smaller, less illustrious stablemate of the Budget, but many announcements will affect the money in wallets and purses.
One move that has been made is a complete overhaul of the stamp duty system.
Rising house prices have pushed many homes into a new bracket of tax.
Under the present system, stamp duty is calculated as a percentage of the whole property price – rising at various trigger points. This is 1% for properties bought for more than £125,000, 3% for homes bought for more than £250,000, 4% at over £500,000, 5% at over £1m, and 7% at over £2m.
For example, £2,500 is levied in stamp duty when a house is bought for £250,000. However, this bill triples if buyers pay a penny more than that for a property.
The chancellor has announced a significant change in the way stamp duty is levied. The surprise is that this will take effect almost immediately.
The new system will mean that, in the same way as income tax, rates apply only to the part of the property price that falls within each band when it is bought.
From today 4 December, this means:
- No stamp duty will be paid on the first £125,000 of a property
- 2% will be paid on the portion up to £250,000
- 5% is paid for the portion up to £925,000
- 10% is paid on the portion up to £1.5m
- 12% is paid on anything above that
Anyone in the throes of buying a property, having exchanged contracts already but not completed, will be able to choose whether to use the old or the new system.
A stamp duty calculator has been created by HM Revenue and Customs.
The changes will apply in Scotland until the Scottish Government’s new progressive rates scheme of rates replaces stamp duty next April.
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