How will the new UK stamp duty rates effect your retirement home buying plan in 2015?
With the new rates in place this year, it’s said 98% of homeowners in England and Wales will pay less than they did under the old system.
As of the 4th of January 2014, the government cut stamp duty rates for the majority of home buyers in the UK. The new stamp duty changes only apply if you are buying a home, in the UK, for over £125,000. This tax still applies to freehold and leasehold properties and counts for both outright property purchases and purchases with a mortgage. Previously, the rule was that you paid tax at a single rate on the property price, now you will just pay the tax rate within each tax band on part of the property price.
However in Scotland the new rates will be implemented on 1 April 2015, when their current Land and Buildings Transaction Tax will replace the current stamp duty rates.
How Much Stamp Duty Will I Pay in the UK?
If you’re thinking about or in the process of buying a new property, it’s important to understand that rates will now only apply to the band that property price falls within. The points below shows each different stamp duty rate, starting with a rate of 2% for properties costing from £125,001 to £250,000, going up to 12% for properties over £1.5 million. The points also show that with the new rates, if your new home costs under £125,000 you’ll pay no stamp duty.
The new rates for each property price bracket are:
- Up to £125,000 : 0%
- £125,001 to £250,000 : 2%
- £250,001 to £925,000 : 5%
- £925,001 to £1.5m : 10%
- Above £1.5m : 12%
The difference with the new rates mean that an average price for a property in England and wales will result in paying £4,500 less in stamp duty.
How to calculate how much you have to pay?
Usually your solicitor or conveyancer will work out how much stamp duty you will need to pay for a property depending on the price of the property and the band rate it fits into. However you can use the HMRC online calculator to help you figure out the exact costs.
How do I Pay for Stamp Duty?
Don’t worry, this process is not changing. All you need to do is submit a stamp duty return and within 30 days of completing the sale of your new home, pay the rate you owe for the property to the HMRC. This is usually the job of a solicitor or conveyancer, but you need to make sure it is complete in the time bracket. Once the valid stamp duty return payment is complete, you will receive a certificate, allowing you to put your title to the property at the Land Registry.
So with all this new information about the new stamp duty system, we’re sure your retirement home buying plan will be made easier and less stressful, so you can put your stamp on your new home!