Stamp duty rates have been cut for 98% of people. Find out how much you could save when buying a new home.

In his Autumn Statement Chancellor, George Osborne announced a change in the stamp duty rates for homebuyers. New cuts mean a reduction in costs for an estimated 98% of buyers. The good news continues as this will take effect from 4th December 2014 so if you’re buying a home you can benefit immediately from the huge savings.

As a homebuyer you will no longer pay a stamp duty rate on the whole purchase price, only the part of the property price that falls within each band - similar to the structure of Income Tax. The stamp duty rate will now rise steadily meaning distortions in the market will be avoided. For example, under the current system, the stamp duty on buying a £250,000 home would be 1% meaning a sum of £2,500 but a transaction for £250,001 would move into the higher 3% tax bracket and incur a stamp duty payment of £7,500. The new stamp duty rate means £250,000 will no longer be a limiting threshold.

So what does this mean in real terms?
If you’re buying a home of around £275,000, 0% will be paid on the first £125,000, with 2% levied on the amount between £125-250,000 and 5% on the £25,000 above that amount. This means an overall payment of £3,750 (at a tax rate of 1.4%) instead of £8,250 under the current system (at a tax rate of 3%) – a substantial saving of £4,500.