In his Autumn Statement, the Chancellor George Osborne announced the abolishment of the residential slab system applied to calculate Stamp Duty Land Tax (SDLT). A new marginal system of taxation is welcome news for landlords who will benefit from lower costs when acquiring property, freeing up funds for property improvements and keeping rents stable.
With immediate effect, each rate will only apply to the part of the property price that falls within that band, very much like income tax. The new marginal rates are as follows:
- No tax on the first £125,000 paid
- Then 2% on the portion up to £250,000
- Then 5% up to £925,000
- Then 10% up to £1.5 million
- Then 12% on everything over £1.5 million
The Chancellor calculates that the new system of SDLT will cut costs for up to 98% of home buyers, resulting in a tax saving of £4,500 on an average priced home of £275,000. Further good news is that anyone in the middle of moving house won’t miss out. Those who exchanged contracts without completing as of midnight on the 3rd December can choose whether to pay under the old or new system.