Legal advice from Chris Illingworth, a conveyancing solicitor at FDR Law’s Frodsham office
Christmas cheer for home buyers
Q: I am just about to exchange legal papers to buy a new home costing £300,000. How will the recent changes to stamp duty affect me? Will they mean I save money?
A: Most new home buyers are getting an early Christmas present thanks to stamp duty reforms, announced by the Chancellor in his autumn statement. The changes are great news for you and with the amount you’ll save, you certainly have good reason to celebrate.
An overhaul of this archaic tax is long overdue and the new rules should remove unpopular price pinch points and make the collection of stamp duty much fairer.
Under the old system, anyone purchasing a property costing between £125,000 and £250,000 would pay 1%, and between £250,000 and £500,000, 3%. Even if the purchase price was only one pound over the threshold, you would pay the higher percentage rate on the entire amount.
This means under the old system you would have paid 3% on the entire £300,000 purchase price, despite being only £50,000 over the threshold – a tax of £9,000.
Under the new system, you pay nothing below £125,000, 2% on the amount between £125,000 and £250,000 (ie £2,500), and 5% on the value of the property above £250,000 (ie 5% of £50,000). The grant total comes to £5,000, saving you an impressive £4,000.
Stamp duty needs to be paid within 30 days of completion or you could be penalised by extra interest payments and fines. In reality most people can rely on their solicitors to take care of this for them and guide them through all the complex legal procedures associated with buying a house.