By Neil Maguire, director at the Bromley office.
With the recent changes to stamp duty for second home owners, plus the complete overhaul of the way the revenue is charged some 18 months ago, it is no wonder that the majority of purchasers are confused as to exactly how much tax they will end up having to pay upon completion.
Therefore, I’ve put together a brief guide in an attempt to remove some of the confusion!
Unlike before, where a flat percentage rate was based on the overall price, stamp duty is now charged in a similar fashion to income tax in that you only pay the percentage rate due for each bracket up to the value of the property. It is set out as follows:
Band 1: £0 – £125,000 0%
Band 2: £125,000 – £250,000 2%
Band 3: £250,000 – £925,000 5%
Band 4: £925,000 – £1,500,000 10%
Band 5: £1,500,000 + 12%
By way of example, on a property with a purchase price of £400,000, you would pay £10,000 which is made up as follows:
Band 1 – £0 – up to £125,000 – 0% – £0
Band 2 – £125,000 – £250,000 – 2 % – £2500
Band 3 – £250,000 – £925,000 – 5 % – £7500
You can also use this link to work out exactly how much you will need to pay:
In April this year the government also brought in an additional charge for second home purchasers. Following this, anyone who already owns a property, either jointly or on their own, will now have to pay an additional 3% over and above the standard charges when purchasing an additional property.
Therefore, on a property selling at £400,000, the rate will increase from £10,000, as calculated above, by £12,000 (3% of £400,000) to £22,000 for a second home purchaser.
If you would like to discuss this, or any other aspect of moving which you are uncertain about, then do please give us a call, we’ll be pleased to help.