Describing the Stamp Duty Land Tax (SDLT) as “one of our worst-designed and most damaging of all taxes,” Chancellor George Osborne yesterday abolished the “single slab rate” SDLT regime and replaced it with a new “marginal rates” system. Like income tax, the rates of the new system will apply only to the part of the property price that falls within that band.
In his Autumn Statement, Chancellor Osborne described SDLT as a “badly-designed tax on aspiration” and said it was time for it to be “fundamentally” changed.
Consequently, SDLT has been restructured and will take effect at midnight on 3 December 2014. The changes apply to all property transactions which complete on or after 4 December 2014. If an exchange took place before 4 December and the contract is completed after that date, you can elect which regime you want to use.
Please see the draft explanatory notes prepared by HM Revenue & Customs regarding the Stamp Duty and Land Tax Bill – specifically section 12 − which gives the new rates. SDLT is now staggered in various bands.
As an illustration, a client buying a £2 million property would pay £53,750 more in SDLT than they currently would pay (please see below for a graph which compares the rules before and after 4 December).
To see how you may be affected, you can input your information into a calculator provided by HMRC.
Should you have any queries about these changes, please do not hesitate to contact the real estate team at McGuireWoods London LLP.