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Osborne eyes long-awaited stamp duty overhaul

Chancellor George Osborne is set to announce reforms to the structure of stamp duty in today’s Autumn Statement as the Conservatives focus their pre-election strategy on homeowners, the Financial Times reports.

Ministers are said to be considering abolishing the current “slab” structure, in which the higher tax rate is payable on the whole amount once the threshold is crossed, in favour of a progressive system.

Industry experts have long been calling for such a move, which would help buyers at the lower end of the property market while charging much heavier levies on those purchasing more expensive homes.

Scotland will ditch the slab structure from April next year in favour of a more progressive system where tax is only charged above thresholds, rather than on the whole amount.

Below £135,000 there will be no tax, between £135,001 and £250,000 buyers will pay 2 per cent and between £250,001 and £1m the rate will be 10 per cent. For properties worth over £1m the rate will be 12 per cent.

Details of the reforms being considered south of the border by the Treasury remain unclear. The Treasury declined to comment.

Read about the full Autumn Statement stamp duty changes here.


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There are 8 comments at the moment, we would love to hear your opinion too.

  1. So on a typical small 1930’s 3 bed terrace at £400k the SD goes from £12k to £17.3k.

    Very progressive……

  2. Progressive means incremental so 0% up to £135k then 2% on the bit up to £250k then 10% on the bit up to £1m. In the £300k example the SD would be £7,300 so less than now. The reason there has been no interest in changing it is the loss of tax revenue as in the example so would have to be made up somewhere else.

  3. Christopher Collins 3rd December 2014 at 12:00 pm

    I was worried they were going to do this. If they follow the Scottish stamp duty reform that’s being introduced next year, we can all look forward to another property crash. Nobody will want to move further up the chain due to the much higher cost in stamp duty, which will lead to a further shortage of homes… Osborne, don’t mess this up.

  4. @DMcC – understand all you write and the mechanics of “progressive”, just that inside the M25 you’d be lucky to get much more than a one bed flat for £300k.

    So the shortfall is being made up disproportionately.

  5. See there’s a 5% rate between the 2% and 10% bands. No doubt there’s debate to be had about how this will impact the market, but at least it won’t be the cliff edge that 2% then 10% would have been.

  6. Using the progressive method, £17,299.98 would be charged for a £400k house compared to the current regime where it would be 12k. The tipping point is when houses are selling for more than £324,275 will cost more in the progressive method than the old method. Therefore those on the low end of the housing market will buy houses that are free of SD and find it cheaper to buy houses on a sliding scale up the new tipping point. Sadly, this means, when we want to move to a slightly larger house, we’re going to find it more expensive to move and we may not sell our house as quickly as it’s worth approx £340k. T

    This will make houses in the sub £320k market even harder to find as it will increase the shortage of affordable housing.

  7. Sorry Mortgage Strategy but the figures you are quoting are wrong, the tax bands are as follows:

    0–125,000 0%
    125,001–250,000 2%
    250,001–925,000 5%
    925,001–1,500,000 10%
    1,500,001+ 12%

    Therefore for those of you who don’t understand what progressive means, the stamp duty paid on a £400,000 property will be £125,000 @ 2% + £150,000 @ 5% = £10,000, a SAVING of £2,000. At £500,000 the payment would be the same, however over £500,000 as the stamp duty threshold used to be 4%, people buying up to £937,000 will be better off, over that figure clients will now pay more unless they have exchanged contracts, they can decide which tax regime to use.

  8. So pleased to hear the 5% band as well. My fears have been quashed

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