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All of this change is very taxing

Following on from Moore Guildford's presentation at the bi-monthly Guildford Property Club, Robert Newman and Mike Wakeford sum up the affects of the Autumn Statement on the property sector. The major, unexpected tax announcement of the Autumn Statement has, alongside the other announcements, changed the way in which Stamp Duty Land Tax on the purchase of residential property is charged.

The reform has removed the anomalies that arose due to the "slab" method of calculating the amount of SDLT payable, which meant that crossing the limit at which the transaction become liable to a higher rate of tax resulted in the whole of the consideration being liable to that rate and not just the excess over the upper limit of the previous band. For example, under the old rules, a property sold for £500,000 resulted in SDLT of £15,000. If the property sold for £500,001 the SDLT payable leapt up to £20,000. These new rules however, mean that the tax is calculated using a more graduated "slice" method (similar to income tax), so only the amounts in excess of the upper limit of the previous rate band will be charged at the higher rate - A much fairer way of charging the tax, resulting in smoother transactions.

Below offers a breakdown of these changes and how they apply:

Residential dwellings sold at or below £125,000 - 0% (SDLT not applicable)
Residential dwellings between £125,000 and £250,000 - 2%
Residential dwellings between £250,000 and £925,000 - 5%
Residential dwellings between £925,000 and £1.5 million - 10%
Residential dwellings sold in excess of £1.5 million - 12% (the maximum rate of SDLT)

NOTE: These rates apply only to the purchase of residential property. The rules and rates for commercial property are unchanged. Also bear in mind that these rates apply only to purchases by individuals. Where the purchase is made by a company the rate of 15% for enveloped properties will apply instead where the purchase price is more than £500,000.

For further information on the above, other implications regarding the Autumn Statement or general tax advice, please get in touch.


[email protected] 01722 335182 

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