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At Autumn Statement on 3 December 2014, the Chancellor of the Exchequer announced a reform of how stamp duty land tax (SDLT) is calculated for residential property purchases which complete on or after 4 December 2014.

The reform does not affect purchases of nonresidential property, enveloped property or the charge on rents. The reform will apply to residential property purchases throughout the UK. In Scotland, it will apply until Land and Buildings Transactions Tax (LBTT) replaces SDLT for transactions from 1 April 2015.

This reform will mean that, rather than a single rate of tax being charged on a purchase, each new SDLT rate will only be payable on the portion of the property value which falls within each band. These new rates and bands will apply to residential property purchases completing on or after 4 December 2014.

Where contracts have been exchanged before 4 December but complete on or after that date, the purchaser can choose whether to pay tax under the old or the new rules.

SDLT will be cut for 98% of people who pay it.

All those purchasing a property for less than £937,500 will pay less or the same SDLT under the new rules. The changes will eliminate the 'cliff edge' increases in SDLT liability which occurred under the old rules, and so reduce pricing distortions which occurred around the previous thresholds. A calculator is available on HMRC's website which calculates the SDLT due under both the old and new rules:

http://www.hmrc.gov.uk/tools/sdlt/land-and-property.htm

Source:HMRC

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