George Osborne announced a change to the way that Stamp Duty Land Tax is calculated as of midnight last night, in his words; “As a result, stamp duty will be cut for the 98% of homebuyers who pay it.”
The headline numbers are:
• No tax on the first £125,000 paid
• 2% on the portion up to £250,000
• 5% up to £925,000
• 10% up to £1.5 million
• 12% on everything above that.
Importantly, the tax is not on a slab basis, but on a sliding scale, which follows the pattern proposed for the Scottish market only 2 months ago.
It works out as a reduction in the rate for all purchases sub £1m, over £1m this new structure works out as £3750 more for a £1m property, £53,750 more for a £2m property, and £163,750 more for a £3m property.
The impact is therefore likely to be felt worse in the higher price bracket where one can expect lower levels of transaction in the future.
It would seem a rather obvious attempt to buy votes ahead of the General Election, and act as a counter to any proposed Mansion Tax by other political parties.
For our market, where typically purchases are in the sub £1m bracket it is a small positive and should keep the first time buyer market moving.