Question: A few weeks ago I exchanged contracts on a house but I am not due to complete the purchase until the end of this month. The price is £475,000 and I am paying £10,000 for contents. My conveyancer has just said that it is up to me whether to use the old rules or the new rules regarding the payment of stamp duty, but has given no further guidance. What should I do?
Answer: New rules for stamp duty were introduced on December 4 and it appears you exchanged contracts before that. Stamp duty used to be paid at a single rate on the full purchase price of a residential property — so had you bought before December 4, you would have used the old rules and the duty would have been calculated at three per cent of the full purchase price of £475,000. This is because the relevant band for stamp duty would have been three per cent for a purchase price of over £250,00 to £500,000 and would have amounted to £14,250. Stamp duty would not have been payable on the contents price of £10,000.
The new rates are: nought per cent up to £125,000 — so nothing to pay; two per cent on £125,001 to £250,000, so £2,500 to pay, and five per cent on £250,001 to £925,000, so £11,250 to pay, making a total amount payable of £13,750. Under the new rules, again, the contents price of £10,000 would be disregarded for stamp duty.
As you exchanged contracts before the new rules came in but are completing after that date, your conveyancer is right, you can choose whether to use the old rules or the new. You will save £500 if you choose the new rules.
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