Yesterday Philip Eagle, tax expert at Hallidays Accountants in Stockport, gave his opinion on the changes to stamp duty announced in the Autumn Statement 2014.
Speaking to BBC Radio Manchester, he explained the impact of the announcement that 98% of home buyers will now pay less in stamp duty.
“[The changes] will definitely be helpful for the people buying the smaller houses and it also will be more sensible, in the fact that it’s always been a bug bear when people go from a £250,000 to £250,001 house where they pay an extra £5,000 stamp duty.”
Explaining the previous stamp duty charges, he continued:
“If you bought a house at £240,000 you paid 1% i.e. £2,400. If you bought a house at £260,000 you paid 3% on the lot which is £7,800. Therefore you’ve got a very big increase which is why the house prices all clustered round £250,000 and then jumped up to £270,000, because people wouldn’t buy one at £250,000.”
The changes announced yesterday mean that anyone now buying a house will pay no tax on the first £125,000 of the property. Stamp duty will then be applied in a graduated rate as follows:
£125,000 – £250,000 2%
£250,001 – £925,000 5%
£925,001 – £1.5m 10%
£1.5m + 12%
For example, if you buy a property for £260,000 you will pay no tax on the first £125,000. Stamp duty will then be applied at 2% to the value between £125,000 and £250,000 and at 5% to the amount over £250,000.
£125,000 – £250,000 2% of £125,000 £2,500
£250,001 – £925,000 5% of £10,000 £ 500
In total you will therefore pay £3,000 stamp duty as opposed to the previous £7,800.
For Hallidays’ complete analysis of the Autumn Statement 2014, please click here