Stamp duty reforms on residential property

Wednesday 3rd December 2014

Major stamp duty reforms on residential property have been announced today. Homebuyers will now pay the rate of tax on the part of the price of the property within each tax band – like income tax. Under the old rules, you would have paid tax at a single rate on the entire property price.

The new rates payable on the part of the property price within each tax band


  • 0 – 125,000 = 0%
  • 125,001 – 250,000 = 2%
  • 250,001 – 925,000 = 5%
  • 925,001 – 1,500,000 = 10%
  • 1,500,001 and over = 12%


The new rules start on 4 December 2014 – but if you have already exchanged contracts on a property you will have a choice of whether to use the old or new rules.


A property purchased for £185,000.00 would have previously attracted a stamp duty of £1,850.00. Under the new rules you will pay 0% stamp duty on the first £125,000.00 and then 2% on just £60,000.00 of the purchase price which means a stamp duty of £1,200.00. This represents a saving of £650.00.

Completing your sale on and after 4 December 2014

If you exchange contracts and complete your home purchase on or after 4 December you will pay stamp duty under the new rules.

Completed your sale before 4 December 2014

If you completed on the purchase of your property on or before 3 December 2014 but have not yet filed your stamp duty return, you still have to pay stamp duty under the old rules.

Exchanged on your contract before 4 December 2014

If you exchanged contracts before 4 December but complete on or after that date you’ll  be able to choose whether the old or new rules apply. In the majority of cases you will pay less tax under the new rules.

The new rules do not apply to commercial property.

These changes will cut stamp duty for 98% of homeowners according to the HMRC and will therefore be a welcome change to many. However, the increases at the top end of the spectrum will have significant implications for those affected.