Stamp Duty is the tax charged by the government when you buy a home for more than £125,000. In December 2014, the government changed the rates for everyone in England, Scotland and Wales. The new changes mean a lot of people will pay less Stamp Duty now than they would have before, making it a great time to buy a new Barratt Home.
What is stamp duty?
It’s the tax charged by the government when you buy a home for more than £125,000. The rate you pay – which depends on the value of your home – changed in England, Wales and Scotland on December 4, 2014. Further changes will come into effect in Scotland in April 2015.
What about the recent changes?
Under the old rules, you paid a flat rate depending on the value of your property – that same rate applied to the entire transaction. Under the new rules the rate changes on a sliding scale, just like income tax (see below).
Customers who have exchanged before midnight December 3rd 2014, but not completed, can choose whether to pay the old or the new rate. Legal advice should be taken if this applies to you.
How much is stamp duty?
New stamp duty rates paid on the part of the property price within each tax band
|Purchase Price||New stamp duty rates paid on the part of the property price within each tax band|
|0 – £125,000||Zero|
|£125,001 to £250,000||2%|
|£250,001 to £925,000||5%|
|£925,001 to £1.5 million||10%|
|More than £1.5m||12%|
So what does that actually mean…
For 98 per cent* of those who pay stamp duty, these new rules mean that you’ll be paying less than before.
… for a property worth £185,000?
Previously, you would have paid £1,850 in stamp duty. Now you will only have to pay £1,200, saving you £650.
… for a property worth £275,000?
Before the changes buying a house for £275,000 (the average UK house price)* – for which stamp duty would have been 3% – would cost you £8,250. Under the new rules, buying that same house would see you taxed for just £3,750, and you’ll be saving £4,500.
… for a property worth £510,000?
For a £510,000 home, the total stamp duty would have been £20,4000 (a flat rate of 4%). Now that home would attract a stamp duty of only £15,500, and you’ll be saving £4,900.
Why do we have to pay it?
When you buy a property the change in land ownership has to be legally registered at the Land Registry. This process requires a certificate from the HMRC – which they will only issue on receipt of the stamp duty due on the purchase of the property. So, put simply, if you don’t pay the stamp duty, you can’t buy your new home. Luckily, you don’t have to worry about it as it’s one of the things your solicitor takes care of.
Where did it come from?
It’s an ancient tax, first introduced in the UK in 1694 during the reign of William and Mary to raise money for the war against France. Initially, it was a tax or duty on documents that required the Royal seal (or stamp) to be legally valid – documents like the transfer of ownership of land.
How can we pay it for you?
Legally, the purchaser has to pay the stamp duty land tax on their purchase. However we may be able to pay the stamp duty for you – just ask the Sales Adviser at the development. Should you proceed with Barratt Homes’ offer, we will send a cheque to your solicitor on completion of the purchase of your new home.
*Source: HMRC Stamp Duty Fact Sheet