Christmas cheer for downsizers in Autumn Statement?
To those contemplating downsizing, the news from the Autumn Statement should offer some cheer
08.12.2014 In his Autumn Statement address on 3 December 2014, Chancellor George Osborne announced a cut in stamp duty, which he said would mean that 98 per cent of homebuyers would see a reduction in the amount of tax they pay.
Under the changes, which became effective from midnight on 4 December, the first £125,000 of a home’s value is completely exempt from stamp duty and only its value over that amount will be taxed in an incremental tax policy similar in application to income tax.
The new rates of stamp duty are:
- First £125,000 – Free
- £125,000-£250,000 – 2%
- £250,000-£925,000 – 5%
- £925,000-£1.5m – 10%
- Over £1.5m – 12%
Under the new rules, a person buying an averagely priced home of £275,000 will pay £4,500 less in stamp duty. According to calculations by the Treasury, only properties sold above £937,500 would see their stamp duty increased.
A ‘psychological boost’ for downsizers
To those contemplating downsizing, the news from the Autumn Statement should offer some cheer.
Writing in Money Week, the influential commentator Merryn Somerset Webb said that the new stamp duty regime ‘might go a small way to persuading the retired to downsize; large stamp duty bills are off-putting for people needing to create income out of limited capital, so any cut here is a “psychological boost”.’
With Hanover’s Downsizer Homes – launching in 2015 – falling into the lower end of stamp duty taxation, those seeking to downsize but put off by the potential tax liability will now be reassured.