The Chancellor has revealed a reform of residential property Stamp Duty Land Tax (SDLT) during his Autumn Statement yesterday.

The previous ‘slab’ SDLT system has been abolished in favour of new rates. These will only apply to the value of the property which falls within each band, which is similar to income tax.

The Chancellor suggests that 98% of house buyers would pay less SDLT.  If you’re buying a home for less than £937,500, you will pay less stamp duty, or the same.

If you are in the process of buying a property, your Solicitor will work out the SDLT you have to pay. HMRC also has an online calculator to help you work out how much you will have to pay.

The new rates are set out below:

Up to £125,000                 Zero
£125,001 to £250,000       2%
£250,001 to £925,000       5%
£925,001 to £1.5 million   10%
Over £1.5 million              12%

This compares with the old ‘flat’ rates which applied to the whole purchase price and which are set out below.

Up to £125,000   Zero
Over £125,001   1%
Over £250,001   3%
Over £500,001   4%
Over £1 million   5%
Over £2 million   7%

The new regime applies to residential properties completed on or after 4 December 2014. However, where contracts exchanged on or before 3 December 2014, and the transaction completes on or after 4 December, the purchaser will be able to choose which rules they wish to apply to them.

The rules imposing a 15% rate of SDLT on the acquisition of residential properties above £500,000 by “non-natural persons” (broadly companies, partnerships including a company and collective investment schemes) remain unchanged. The changes also relate to residential property only.

Conveyancing specialist, Quentin Dodd, said “The changes, although rather sudden, are welcomed as the system has been in need of reform for some time. The previous SDLT bands were rigid & did not reflect the upwards movement of the average house price.

The changes will help the housing market generally but particularly first time buyers & young families moving up the housing ladder.”