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Stamp Duty Land Tax changes

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The calculation of stamp duty land tax (SDLT) for residential properties changed on 4 December 2014.The new rates, which apply where purchases are completed on or after 4 December 2014, are set out below. Each new SDLT rate will only be payable on the portion of the property value which falls within each band (rather than tax being due at one rate on the entire property value).

Key points  

  • This is a move from a 'slab' to a 'slice' system.
  • Changes take effect for transactions completing on or after 4 December 2014 (with transitional rules for those who exchanged contracts before that date)
  • The reform affects residential property transactions only. Commercial property transactions are unaffected.
  • SDLT will be cut for 98 per cent of people who pay it and everyone buying a house for up to 937,500 will pay less or the same SDLT as under the current system.
  • The new rates will apply to homes purchased in Scotland until 31 March 2015. After this date the Land and Buildings Transaction Tax (LBTT) replaces SDLT in Scotland. 

New rates

Under the new rules, tax will be charged at a marginal rate on each slice of the consideration for a transaction: 

  • 0% on any amount up to £125,000
  • 2% on any amount over £125,000 up to £250,000
  • 5% on any amount over £250,000 up to £925,000
  • 10% on any amount over £925,000 up to £1,500,000
  • 12% on any amount over £1,500,000 

Anyone who exchanged contracts before 4 December (and completes on or after that date) can choose whether to use the old or the new rules simply by entering the appropriate amount of tax on their land transaction return. 

Please contact a member of our Property team for a quote for residential conveyancing.

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