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UK Stamp duty saves buyers £700m in tax…

June 8th 2015
By: Melanie Hollidge

Since the new stamp duty tax changes were introduced last December, it’s estimated that homeowners have saved a staggering £701 million in tax. The changes which were made six months ago have benefited home buyers buying a property worth less than £937,500 giving each buyer an average saving of £1,400 per property, according to research by myhomemove.
 
The OBR, Office for Budget Responsibility have estimated that it will cost the treasury over £700m in lost taxes this year alone.
 
The new changes have made it much easier for home buyers struggling to save up enough money to buy a house, which in return has had a very positive effect on the market, as they have enabled first time buyers to save up enough money for a deposit.  
 
The amount of SDLT, Stamp Duty Land tax, when you buy a property depends on whether the house is residential and how much the property price falls between each threshold. If you would like to work out exactly how much SDLT you will need to pay on a new property then you can use the official calculator http://www.hmrc.gov.uk/tools/sdlt/land-and-property.htm
 
The moneysavingexpert.com website has given a typical example of how much a buyer would need to pay under the new system and the old based on a property worth £300,000, which highlights the amount of money buyers at the lower end of the market can save.
 
Old system:
You would have paid 1% on a property between £125,000 and £250,000, between £250,000 and £500,000 you'd pay 3%. So because the purchase price is over £250,000, you'd have paid 3% on the entire purchase price, despite only being £50,000 above the threshold. Thus, you'd have paid £9,000 in stamp duty.
 
New system:
You pay nothing below £125,000, which is £0
You pay 2% on between £125,000 and £250,000, which is £2,500
You pay 5% on the value of the property above £250,000, which is £2,500
So in total this means you'll pay £5,000 (£0+£2,500+£2,500).