Stamp Duty Tax

New Legislation Does Away with Distorted Old System
Benjamin Franklin is credited with having once said that there are, “Two things certain in life: death and taxes.” Since the beginning of time, taxes in some form or another have been levied by governments.
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Taxation is usually done under the guise of caring for the people and working for the common good of the nation. However, once the tax is implemented, it usually remains in place no matter how distorted, outdated, or unfair it might be. The Stamp Duty Act of 2015 is a breathe of fresh air in the business of taxation because it was legislation designed to right a wrong and correct a flawed system.
Stamp Duty Tax 2015

The Stamp Duty Tax, an important source of government revenue, is a tax on the purchase of property and land in the UK. It is calculated as a percentage of the cost and is applied to the whole purchase price of the property. For example, there is no duty on a house that cost 125,000 pounds, but a house costing 125,001 pays a duty of 1% adding 1250.01 to the purchase price. The following table shows the SDLT rates for 2013-2014 (these rates are in British pounds not dollars):

Purchase Prices SDLT rates

  • Up to 125,000 Zero
  • Over 125,000 to 250,000 1%
  • Over 250,000 to 500,000 3%
  • Over 500,000 to 1 million 4%
  • I million to 2 million 5%

The old system flawed and often criticized made homeownership an impossible dream for first time buyers and those at the bottom of the “housing rung”.
The tax though prohibitive to those with limited finances generated a lot of money making it a system politicians were reluctant to change.

The new system brought changes in the basic calculation for Stamp Duty Land Taxes on residential property and provided new rates. Because of these changes 98% of homebuyers will see a reduction in what they will pay when purchasing a home. With the new system, the taxable rates will apply to the amount of the purchase that falls within a specific taxable band. For example a house purchased for 200,000 pays nothing on the first 125,00, but will pay 2% on the remaining 75,000 leaving a tax bill of 1500 to pay. These are the new rates (valued in pounds not dollars):

New Rates

  • Up to 125,000 0%
  • 125,001 to 250,000 2%
  • 250,001 to 925,000 5%
  • 925,001 to 1.5m 10%
  • Above 1.5million 12%

Thanks to the Stamp Duty Tax of 2015 that which was once a dream is now a reality. Winston Churchill said that “There is no such thing as a good tax.” He might change his mind when he sees the good this tax will bring.