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What changes to UK Stamp Duty to expect in 2016?

Stamp Duty Land Tax (SDLT) is a progressive tax paid when purchasing a freehold, leasehold or shared ownership residential property over £125,000 in England, Northern Ireland and Wales (separate Land and Buildings Transaction Tax in Scotland). New SDLT rates were introduced in 2014's Autumn Statement, introducing a sliding system based on thresholds and dependent on a property price.

How has UK Stamp Duty changed since 2014?

Before 2014 a 'slab structure' was in place with buyers paying a rate based on the ENTIRE property purchase price. The new rates are now payable only on the PORTION of a property price which falls within each band. As with every tax, there are those who will be better and worse off compared to the previous system.

Stamp Duty Tax Rates as of December 2014

Brackets Rate

£0-£125,000 0%

£125,001-£250k 2%

£250,001-£925k 5%

£925,001-£1.5m 10%

£1.5m+ 12%

How to calculate the new Stamp Duty rate

So, if you bought a property for £850,000 you would you pay no stamp duty on the first £125,000, then 2% on £125,000 to £250,000 and 5% above £250,000. (eg: £800,000 - £250,000 = £600,000 x 0.05 = £30,000 + £2,500 = £32,500). As the property price increases the rate of pay increases within a certain tax bracket with percentages rising when a higher price threshold is reached. Under the new SDLT property over £925,000 - £1.5m will be taxed at a rate of 10% compared with 5% in 2014. See historic SDLT rates.

Buy-to-let and second homes Stamp Duty 2016
From April 2016, property buyers in England and Wales will have to pay an additional 3% on each stamp duty band.

Buy-to-let and second home Stamp Duty tax bands

Brackets Standard rate Buy-to-let/second home rate (April 2016)

Up to £125,000 0% 3%

£125,001 - £250,000 2% 5%

£250,001 - £925,000 5% 8%

£925,001 - £1.5m 10% 13%

over £1.5m 12% 15%

Source: HMRC

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