The history of Stamp Duty goes back to the 17th Century, the current system was largely introduced in the 1950s. Over the decades, this unpopular and punitive tax has been revised by previous governments. Though its during Gordon Brown’s tenure as Chancellor that we saw a root and branch reform as house price inflation soared.
The slab style system that was in place had several changes made to it- below is what it looked like before the significant changes in December 2014.
A new rate of 7% commences for property sales over £2,000,000. No changes occurred during 2013.
- Up to £125,000 – 0%
- Over £125,000 and under £250,000 – 1%
- Over £250,000 and under £500,000 – 3%
- Over £500,000 and under £1,000,000 – 4%
- Over £1,000,000 and under £2,000,000 – 5%
- Over £2,000,000 – 7%
Over the years its been amended with thresholds affecting the higher value purchases of £1m or more ( as per above). The old slab style system was ditched by his successor, George Osborne, in a move to slow down what had become a buoyant market, though has been widely criticised for having an adverse affect and a stealth tax on London and the South East. Below is what the current system looks like with the revised thresholds with tax payable only on that part that falls within the bands.
For example, a purchase of £275,000 would have 0% on the first £125,000, 2% on the next £125,000 = £2,500 , then 5% on the final £25000 = £1250. Total SDLT £3,750
|Purchase price of property||Rate of Stamp Duty||Buy to Let/ Additional Home Rate*|
|£0 – £125,000||0%||3%|
|£125,001 – £250,000||2%||5%|
|£250,001 – £925,000||5%||8%|
|£925,001 – £1.5 m million||10%||13%|
Purchases of second homes and or Buy to Let investments have an additional 3% levy. A useful tool is the Stamp Duty Calculator