The changes to stamp duty have saved homebuyers £657m in just over a year, according to the latest government figures.
More than 780,000 people have benefited across England and Wales.
The changes, which came into effect in December 2014, introduced more gradual increases in stamp duty rates. Under the previous system, the duty was a slab tax, meaning it suddenly jumped by large amounts between the different thresholds.
This meant that someone buying a home for £250,000 would pay a 1% stamp duty of £2,500. However, if the property went over the £250,000 threshold, even by only £1, then the rate would jump to 3%.
The new system is more progressive. The rates of stamp duty only apply to the amount of the purchase price that falls within each band.
This means that a person buying a house for £200,000 will pay nothing on the first £125,000, as that is zero rated. They will then pay 2% on the next £75,000, making a total tax bill of £1,500. Under the previous system they would have paid 1% on the total purchase price, providing them with a bill of £2,000.
The new system therefore saves them £500.
The new rates are:
• Up to £125,000 : 0%
• £125,001 to £250,000 : 2%
• £250,001 to £925,000 : 5%
• £925,001 to £1.5m : 10%
• Above £1.5m : 12%.
Chancellor George Osborne says 98% of homebuyers are saving money; only those buying homes worth more than £937,000 are worse off because of the changes. Stamp duty receipts from homes costing more than £1m went up by 15% across the year.
Please contact us if you would like more information about the legal aspects of buying or selling a home.