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Changes to Stamp Duty Land Tax (SDLT) | Properties over £2m taxed 7%
In the 2012 budget it has been announced that from midnight on the 21st March Stamp Duty Land Tax (SDLT) will increase from 5% to 7% on property above £2m. Originally property over £1million was levied at 5%, so for those buying a £5million home will face a stamp duty bill of £350,000 – an overnight increase of £100,000.
Chancellor George Osborne announced the increase in his budget statement and said it is “fair when money is tight, and so many families could do with help, that those buying the most expensive homes contribute more”.
According to HM Land Registry’s House Price Index in January the average price of a property in the UK is just above £165,500 falling well below the threshold for the increase but in areas like central London a £2m price tag is not uncommon. The latest statistics from the Land Registry show that, in November 2011, there were 121 homes sold for more than £2m in England and Wales. That accounted for just 0.2% of the 57,967 homes sold that month. Of these 121 homes, 98 were in London.
Estate agents have already warned that the stamp duty increase on luxury homes could hit all homeowners and buyers by triggering a slowdown in the areas of the property market which have been vital to supporting prices – particularly in London, which is where 80 per cent of £2million properties are located.
All other stamp duty rates remain unchanged.
In addition to this increase at the higher end of the property market, from the 24th March 2012 the Government will also withdraw the First Time Buyer stamp duty land tax relief. This was introduced in respect of homes bought by first time buyers and who completed their purchase on or after 25 March 2010 and before 25 March 2012. It increased the threshold from which you start to pay SDLT from £125,000 to £250,000. From the 25th March this relief is withdrawn and stamp duty land tax will once again be charged on all property purchases above £125,000.
You can check current rates of SDLT on the HM Revenue & Customs (HMRC) website: