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9 December 2014

Changes to Stamp Duty Land Tax

Following the Chancellor's Autumn Statement on 3 December 2014, there has been a change in the calculation of Stamp Duty. This change will reduce the Stamp Duty Land Tax ("SDLT") payable for all purchasers who are buying a residential property under the price of £937,000.

The new calculations for SDLT came into force on 4 December 2014.  If contracts have been exchanged on the purchase prior to this date but with completion on or after 4 December 2014, the buyer can elect to pay under the old rules or the new.

Previously, Stamp Duty was a percentage to be paid on the whole purchase price.  This percentage was based on the price of the property as follows:

£0 – £125,000    0%
£125,001 – £250,000  1%
£250,001 – £500,000  3%
£500,001 – £1 million  4%

This would mean that a person buying a property for £175,000.00 would have previously had to pay £1,750.00 in SDLT.

The new calculation of SDLT is based upon taxing the portion of the property which falls between each rate band.  The new bands are as follows:

£0 – £125,000   0%
£125,001 – £250,000  2%
£250,001 – £925,000  5%
£925,001 – £1.5 million 10%

Therefore a person buying a property for £175,000 will now have to pay £1,000.00, which is 2% payable on the amount between £125,000 and the purchase price.

If the purchase price of a property falls into a higher bracket, the amount payable in the lower brackets must also be paid.  For example, if buying a property at £300,000.00:

£0 – £125,000   Zero
£125,001 – £250,000  £2,500
£250,001 – £925,000  £2,500

Total to be paid  £5,000

If you have any queries in relation to Stamp Duty, please do not hesitate to contact Steeles Law’s conveyancing team on realestate@steeleslaw.co.uk or 01603 598000.