In his final blog post of the week, Richard Carr explains the reforms to ‘Stamp Duty’ outlined in George Osborne’s final ‘autumn statement’ before next year’s general election.
The new stamp duty reforms are now in force and will affect homebuyers across the country. During his autumn statement speech, Osborne claimed that stamp duty will be cut for 98% of homebuyers who currently pay it.
For example: you would receive a tax cut of £4,500 when purchasing an average £275,000 family home.
What bands are affected by stamp duty?
Below are some easy bullet points to help you understand how much stamp duty you will now pay:
- Homes worth £125,000 or less = 0%
- Homes worth between £125,000 and £250,000 = 2%
- Homes worth between £250,000 and £925,000 = 5%
- Homes worth between £925,000 and £1.5m = 10%
- Anything above £1.5m = 12%
If you are still unsure, HMRC has an online calculator which will help you work out how much you have to pay.
What was the issue with the old system?
Homebuyers under the old regime basically paid more. Anyone buying a house for £185,000 – the average paid by people using the government’s ‘help-to-buy’ scheme – or less would have paid 1% on the full amount – or £1,850.
Under the new reforms the buyer would pay nothing on the first £125,000 and 2% on the remaining £60,000, which works out at £1,200.
Why do we pay stamp duty?
Stamp duty is the oldest of all UK taxes, first levied in 1694 to help pay for war against France.
In Richard Carr’s opinion, George Osborne’s reforms of the old system are very welcome. Although it probably won’t have much effect upon the current housing crisis, it will save people money, which is always very welcome.
Richard Carr is an expert in the commercial and residential development sector, an area in which he has worked for over 30 years. He provides advice and seeks planning for both commercial and residential developments for his employer Jacob Carr Homes Ltd.
Richard continued, I’m very pleased with this, but it’s plainly a political move to destroy Labour’s ‘Mansion Tax’, which is where I believe the issue is. Ed Balls has said today that nothing changes, well if the Socialists get into power that would be a travesty for London and the South East.
People who verbally bash investors into London property are foolish and very small minded, all of these properties need to be built and maintained and that creates jobs through all spectrums.