The January Finance column from David Butler of Clay Shaw Butler

By David Butler, director of Clay Shaw Butler chartered accountants and business consultants.

January is the busiest month of the year for us at Clay Shaw Butler as we make sure everyone gets their tax returns sorted before the deadlines.
But that doesn’t mean we ignore the other issues pressing on the minds of our customers.
One of those issues has surrounded the reforms on Stamp Duty Land Tax (SDLT).
The Chancellor of the Exchequer George Osborne announced changes to SDLT on residential property transactions in his Autumn Statement.
This change applies to you if you are buying a home in the UK for over £125,000.
Stamp duty will be cut for 98% of people who pay it. If you’re buying a home for less than £937,500, you will pay less stamp duty, or the same.
Historically, SDLT has been charged at a single percentage of the price paid for the property, depending on the rate band within which the purchase price falls.
Now, the SDLT system has been changed and each new SDLT rate will only be payable on the portion of the property value which falls within each band.
This will remove the distortion created by the existing system, where the amount of tax due jumps at the thresholds.
The Government believes that this reform makes SDLT more efficient and fairer, and ensures that SDLT will be cut for 98% of people who pay it.
Under the old rules if you bought a house for £185,000, you would have had to pay 1% tax on the full amount – a total of £1,850.
Under the new rules, for the same property you’ll pay nothing on the first £125,000 and 2% on the remaining £60,000. This works out as £1,200, a saving of £650.
HMRC has an online calculator to help you work out how much stamp duty you will have to pay.

You can find it at –
http://www.hmrc.gov.uk/tools/sdlt/land-and-property.htm

Here, then are some examples of how Stamp Duty will work -

• £125,000 - No stamp duty 
• £185,000 - Average Help to Buy home. Tax paid under the old rules, £1,850. Tax paid under the new rules, £1,200. Change in amount of tax paid: Saving: £650. Effective tax rate you’ll pay under the new rules, 0.7%. 
• £275,000 - Average family home. Tax paid under the old rules, £8,250. Tax paid under the new rules, £3,750. Change in amount of tax paid:Saving: £4,500. Effective tax rate you’ll pay under the new rules, 1.4%. 
• £510,000 - Average London home. Tax paid under the old rules, £20,400. Tax paid under the new rules, £15,500. Change in amount of tax paid: Saving: £4,900. Effective tax rate you’ll pay under the new rules, 3.0%. 
• £937,500 - No change in stamp duty. Tax paid under the old rules, £37,500. Tax paid under the new rules, £37,500. Change in amount of tax paid: No change. Effective tax rate you’ll pay under the new rules, 4.0%. 
• £2,100,000 - Stamp duty increase. Tax paid under the old rules, £147,000. Tax paid under the new rules, £165,750. Change in amount of tax paid: Increase: £18,750. Effective tax rate you’ll pay under the new rules 7.9%. 

Important: The Stamp Duty changes do not affect commercial properties.
How to pay stamp duty -
This is not changing. As before you will need to submit a stamp duty return and pay what you owe within 30 days of completing on the sale of your property.
You still have to submit a return even if you are not due to pay any stamp duty on the purchase price of your property, unless the property costs less than £40,000.
It is your responsibility to ensure that the return is completed on time, but most people employ a solicitor or a conveyancer to complete the return for them.
On receipt of a valid stamp duty return, HMRC issues a certificate which allows you to register your title to the property at the Land Registry,
You can find out more about money matters on the new-look Clay Shaw Butler website (under or news for business section) -
http://www.clayshawbutler.com/news/latest-news-for-business

At Clay Shaw Butler, we have a very defined mission for 2015.
It goes something like this . . .
We have a strong and experienced team with great local knowledge all geared-up to helping you get the very best from your finances – whether that is as an individual or as a business.
We stay ahead of the game by putting great store by continual professional development for our staff.
Our director Mark Jones is now a chartered tax advisor and team member Trina Griffiths has just successfully completed her Chartered Certified ACA exams.
With Investors In People status at Clay Shaw Butler, we care passionately about making sure our staff have all the tools they need to serve you, our customers.
Weblink -http://www.clayshawbutler.com
The team at Clay Shaw Butler can be contacted on 01267 228500.
The team at Clay Shaw Butler are on Twitter. Look for @clayshawbutler.