In today’s Autumn Statement, George Osborne has announced sweeping changes to the way Stamp Duty Land Tax is calculated, promising that his reforms will deliver savings for 98pc of home buyers.

Under the old regime Stamp Duty Land Tax on residential property was paid at certain thresholds as follows:

In today’s Autumn Statement, George Osborne has announced sweeping changes to the way Stamp Duty Land Tax is calculated, promising that his reforms will deliver savings for 98pc of home buyers.

Under the old regime Stamp Duty Land Tax on residential property was paid at certain thresholds as follows:

Purchase price of property Rate of SDLT
Up to £125,000

Zero

Over £125,000 to £250,000

1%

Up to £125,000

Zero

Over £125,000 to £250,000

1%

Over £250,000 to £500,000

3%

Over £500,000 to £1 million

4%

Over £1 million to £2 million

5%

Over £2 million

7%

This system will be replaced by a new graduated rate, this will work in a similar way to income tax, and be effective from midnight on 3rd December and will be calculated as follows:

Purchase price of property Rate of SDLT
Up to £125,000

Zero

Over £125,000 to £250,000

2%

Over £250,000 to £925,000

5%

Over £925,000 to £1.5 million

10%

Over £1.5 million

12%

This means that that there will be no SDLT on the first £125,000, 2% between £125,000 and £250,000, 5% between £250,000 and £925,000, 10% between £925,000 and to £1.5m, and 12% on anything above £1.5m.

There is quite a jump in SDLT for those that own Property more than £925,000 and a leap for those who own property worth more than £2m who under the previous system paid SDLT at 7%. Under the new system and using the blended rate, a home owner with a Property worth £2m will pay an additional £50,000. Commentators believe that this is intended by the Chancellor to counter the calls for mansion tax on high value properties.

The changes will apply to residential properties completed on or after 4 December 2014. If you have already exchanged contracts, or will do so before midnight on 3 December 2014, then you can choose whether to pay Stamp Duty under the old or the new rules.

Market commentators will welcome the changes to the way that SDLT is structured as it will remove the effect that the current tax bandings on residential property.

These changes come hot on the heels of the final proposals released by the UK government final proposals on the taxation on non-residents on profits from disposals of UK residential property. As a result CGT will be payable by non-UK residents with effect from 6 April 2015 at a rate which will broadly mirror that payable by equivalent UK residents, though there are some variations.

Collas Crill’s pan Channel Island UK real estate practice acts for Channel Islands resident UHNWs, banks, funds and trust companies investing in prime UK real estate. Collas Crill is the only Channel Island law firm able to advise in relation to UK property transactions and is the primary law firm on the lending panels of the Channel Island branches of a large number of banks who are actively lending into the UK.