During December 2014 the new stamp duty rates were introduced with Scotland bringing in their own Land and Building Transaction Tax on 1st April 2015. The system works more like income tax rather than the old rating system which charged progressively higher rates on the whole of the purchase price, allowing a sudden increase in the amount due when the purchase price tipped over into the next band.
The new system simply means that there is no tax payable on the first £125,000, after that a 2 per cent charge is levied on the remaining balance up to £250,000 and between £250,000 and £925,000, a five per cent is charged. So, for example, anyone buying a property for £225,000 would not be liable to pay any duty on the first £125,000, and only pay 2 per cent duty on the remaining balance of £100,000. This would amount to a stamp duty bill of £2,000 instead of the £2,250 under the old rate of 1% on the full purchase price.
According to a report by the BBC, George Osborne said that following the implementation of the new ratings 98% of homeowners in England and Wales would be paying less stamp duty when they purchase a property.
In the article Mr Osborne told MP’s that; “It’s time we changed this badly-designed tax on aspiration,”
For those who purchase a property worth more than £937,000 it’s not all good news as they may find that they are paying more under the new rating structure.
For landlords these changes should mean that they are paying lower costs on future let property investments and encourage expansion of their rental property portfolios. It may also attract new investors who are looking to enter the buy to let market. It is always a good idea to take into account any potential savings and all those additional costs like let property insurance when looking to purchase a rental property. Click4quote.com can provide let property insurance so why not get an online quote today.