Stamp Duty thresholds have changed, under new rules which came into force on the 3rd December 2014. What do Stamp Duty changes mean for you? We take a look and explain how they will effect your property purchase.

Stamp duty land tax (SDLT) is the tax you pay when you buy a property. The old rules used what HMRC called a ‘slab structure’. The amount of tax you paid depended on the price band your property fell in.

If you were buying up to £125,000 no stamp duty was paid but after that there were five bands, as follows.

  • Between £125,001 and £250,000 – a 1% charge
  • Between £250,001 and £500,000 – 3%
  • Between £500,001 and £1m – 4%
  • Between £1m and £2m – 5%
  • above £2m – 7%
  • Homes of more than £500,000 bought by companies rather than individuals had a rate of 15%.

The key point was that you paid the percentage charge on the whole amount of the price, not on an incremental basis. So, if you bought a house for £200,000 you would pay SDLT of £2,000 (1% of £200,000); the tax would not be applied only to the excess over £125,000.

The effect of this was that there were large hikes in the amount of SDLT you paid when you crossed from once band to another. For example, you would pay £2,490 on a property costing £249,000 but £7,530 on one costing £251,000.

Not only was this unfair, it caused house prices to bunch artificially below the thresholds.

The new stamp duty changes work on a similar basis to income tax with SDLT being paid progressively as you go through the thresholds, providing good news for many buyers. The new bands are as follows:

  • Up to £125,000 – still 0%
  • £125,001 and £250,000 a rate of 2%
  • £250,001 and £925,000 a rate of 5%
  • £925,001 and £1.5m a rate of 10%
  • Above £1.5m a rate of 12%.

On a £200,000 purchase you would pay no tax to pay on the first £125,000, then 2% on the remaining £75,000. The total bill would be £1,500, compared to £2,000 before the changes.

However, it is not good news for everyone. You will only be better off if you are buying for less than £937,000. A purchase of more than that sum will mean you pay more under the new rules.

If you are buying London property for £2.1m, for example, you will pay £165,750 under the new regime compared to £147,000 previously.

If you are looking to buy in the coming months, please visit one of our offices and discuss your requirements with a member of staff who will be happy to help and discuss how these changes will effect your sale. You can find the contact details of all our offices here: