Homebuyers have saved £657M on Stamp Duty Land Tax in the year since the tax was reformed.
The Chancellor of the Exchequer George Osborne announced yesterday that over 780,000 homebuyers saved an estimated £657M on Stamp Duty Land Tax (SDLT).
In December 2014 the government reformed the residential stamp duty system, changing it from a “slab” to a “slice” structure and reducing stamp duty for 98% of people who pay it. Under the new regime, transactions levels at the top end of the market remained constant, and stamp duty receipts from homes costing more than £1M went up by 15% across the year.
The benefits of the reform can be felt across the country, with homebuyers saving an estimated total of £24M in the North East, £90M in the North West, £74M in the East Midlands, £131M in the South West and £38M in Wales.
The Chancellor George Osborne said: “In 2014 I cut stamp duty and already three-quarters of a million home-buyers across the country have benefitted. The overwhelming number of home-buyers – 98% – are saving money thanks to our reform, which has done away with the unfair old system that meant increases being imposed on those paying just a pound over the threshold.
“These figures show that the benefits are being felt across the country. It’s a fair, workable, lasting reform to the taxation of housing.
“I am determined that this Government will continue to take bold action to support a home-owning democracy.”
The new system allows homebuyers to only pay the rate of tax on part of the property price within each tax band, moving on from the old slab system where homebuyers would have paid stamp duty at a single rate on the entire property price.
The news coincides with new analysis from the International Monetary Fund (IMF), finding that the reform has “reduced distortions and is a step in the right direction.”
The IMF commented on the impact of the Stamp Duty reforms as part of its annual Article IV consultation with the UK.
From 1 April 2015, SDLT in Scotland was replaced by the devolved Land and Buildings Transaction Tax system. The reduction in SDLT liabilities covers Scotland for the period that SDLT remained liable between 4 December to 2014 and 31 March 2015.