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How Changes in Stamp Duty Could Affect Home Buyers

As of Autumn last year, Stamp Duty was reformed to a threshold-based system, meaning some homeowners will face having to pay a higher tax, whilst others may not have to pay any at all.

The reforms mean that home buyers in the thresholds between £125,000 – £250,000 face paying 1% more, although those paying under £125,000 will not pay any stamp duty.
The new thresholds are:

– 0% for the first £125,000

– 2% up to £250,000

– 5% up to £925,000

– 10% up to £1.5m

– 12% on anything more.

The tax is now levied progressively, similarly to income tax, with percentages increasing above thresholds, meaning those buying homes up to £100,00 more than the £250,000 threshold will make some of the biggest savings.

The Autumn 2014 reform does mean, however, that only the percentage of property price that falls within each band will be taxed – meaning those just over the threshold pay less than those considerably over.

How will this affect home-buyers?

For those looking to purchase a home, smarter decisions can be made to ensure you fall the right sight of the tax threshold. For example, buyers can appeal to sellers to accept a price just under one of the thresholds, paying less stamp duty but still being at the very top of the lower threshold, which can translate to massive savings.

The reforms have seen reports of Britain’s wealthiest hesitating to buy homes until any stampy duty reforms were made. Letting Agency Knight Frank reported a huge 1,825 surge in applicants willing to pay up to £5,000 a week to rent homes, rather than buying straight away and risk being charged with a higher stamp duty percentage.

As leading experts in the Removals industry, here at Rylands of Manchester we prioritise staying up-to-date with property news, allowing us to better advise our customers.

Contact us today to discuss the services we offer, or for a free quote on your big move, and our team will be more than happy to help you.