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8

Under the new system stamp duty will not be charged on property values up to £125,000, the value of a

house between £125,000 and £250,000 will be taxed at 2%, and so on. Values above £1.5 million will be

taxed at the top rate of 12% on everything over that threshold.

A

s Figure 1

illustrates, stamp duty payments under the current system consistently surpass those of the

previous one around the £1.1 million property value mark. The Chancellor pointed out that the reform

translates into lower stamp duty payments for 98% of home buyers and only those buyers at the very

high end of the property market will end up paying more.

Figure 1: Stamp duty land tax (SDLT) payment amount by property value, previous and current SDLT

system

Source: ONS, Cebr analysis

Cebr’s own analysis estimates that in 2015, roughly 401,000 homes will be subject to a higher stamp duty

payment if they were to be bought.

1

This represents some 1.7% of the total dwelling stock.

Despite higher payments for those at the prime end of the market, the government is expecting the

reform to result in an overall loss in stamp duty tax receipts. Whilst this loss will be partially offset by the

increased tax levied on enveloped dwellings i.e. high value residential properties owned by companies, it

is estimated the changes will reduce revenues by around £760 million next year as shown i

n Figure 2.

1 This is the number of properties valued at or above £937,000, the house price above which homes begin to become subject to a higher payment.

£0

£50,000

£100,000

£150,000

£200,000

£0

£250,000

£500,000

£750,000

£1,000,000

£1,250,000

£1,500,000

£1,750,000

£2,000,000

£2,250,000

£2,500,000

Stamp duty bill

House price

New stamp duty system

Incumbent stamp duty system

© Centre for Economics and Business Research - Report Commissioned by Howard Cox for the FairHomeTax.UK Campaign