Stamp Duty rates explained.
Its been nearly a year since the new stamp duty rates were introduced for property purchases. However, we are regularly asked to explain what they are and how much you'll pay. So we thought we’d put together a quick guide here to help.
This guide explains stamp duty rates and recent changes, leaving you in complete control of your money when buying property.
Stamp Duty rates
How much stamp duty you pay when buying a property depends on the purchasing price – the more expensive the property, the more you have to pay. The current starting threshold is £125,000. Below that amount, won’t have to pay anything. The rates then increase in increments, starting at 2 per cent and going up to 12 per cent for properties purchased for £1,500,001 and over. The table below shows the different property purchase price bands and their stamp duty rate.
Property purchase price Stamp duty rate
£0 - £125,000 0%
£125,001 - £250,000 2%
£250,001 - £925,000 5%
£925,001 - £1,500,000 10%
£1,500,001 and over 12%
How are Stamp Duty rates calculated under the new system?
Instead of the old “slab” system, the way stamp duty is calculated now is much more progressive. The amount you pay is still based on a percentage of the purchasing price. However, the higher rate is only paid on the proportion of the purchase price that is actually above the higher threshold. For example, if you were purchasing a property for £300,000, you would pay £5,000. This is calculated like the following:
•No stamp duty on the first £125,000 = £0
•2 per cent on the proportion of the property price between £125,001 and £250,000 = £2,500
•5 per cent on the proportion between £250,001 and £925,000 = £2,500
•£0 + £2,500 + £2,500 = £5,000
Under the old system, if you bought a new house for £300,000, stamp duty would be 3 per cent of the whole purchase price. This meant you would have to pay £9,000. Under the new system, you’re saving £4,000.
Read more at http://www.zoopla.co.uk/discover/buying/property-guide-stamp-duty-rates/#jxtuY18PMQxR6Eo0.99
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