Is a 7% stamp duty a workable mansion tax?

Chancellor of the Exchequer George Osborne Collecting a 7% stamp duty could be a challenge

Senior Lib Dems argue that the 7% stamp duty rate being introduced in today's budget on residential properties worth more than £2m is not far off a mansion tax.

It is equivalent to more than 0.5% a year for a property held for 10 years. And if it is actually paid, the annual yield could be hundreds of millions of pounds a year - such has been the inflation in the prices of swanky homes in London and the south east over recent years.

The question is whether it will actually be paid. Vast numbers of expensive properties have been transferred into the ownership of offshore companies - where the stamp duty charge is just 0.5% when the offshore company is purchased.

HMRC thinks it can abolish the loophole which allows this much lower charge on offshore companies.

But accountants warn it won't be easy: the government dare not introduce a 7% stamp duty charge on purchases of shares in all companies; and if the higher stamp rate is restricted to companies whose only asset is a house, proving that's the case won't be easy for companies registered in secretive tax havens such as the Cayman Islands.

George Osborne may say he'll get the extra stamp duty from Russian oligarchs, oil sheikhs, bankers, rockstars and footballers. But their famous creativity in avoiding tax tends to be hard to squish.

Robert Peston Article written by Robert Peston Robert Peston Economics editor

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  • rate this

    Comment number 184.

    It is a million miles from an immoral mansion tax. You are deceitful to try on such wording. Paying a transactionbn tax is decent, moral acceptable. Real money in a real sale, can't pay the tax, do not buy. Fair.

    Taxing mere ownership of any asset ever at all, is the complete opposite, evil, disgusting, wrong.

  • rate this

    Comment number 183.

    I think I'm getting it now...
    Transfer of 2M+ property out of offshore company, or purchase of offshore company whos only asset is 2M+ house by UK resident implies 15% tax. Bundle in a Ferrari on the drive, and lets face it any self respecting millionarre needs one of those, also owned by the same company and tax reduces to 0.5% ?

  • rate this

    Comment number 182.

    180. "that was a perversion of the real concern of the way the financial sector was crippling the economy"

    I'm sorry this statement does not make sense (well at least to me). Germany in the 30s has little to do with financial sector as such; but that's another story.

    "This is really bankers trying..right to their greed."

    Oh dear you seem incapable of moving beyond this blind alley

  • rate this

    Comment number 181.

    It looks like there are still too many loopholes, 50% tax rate not workable but this is? It will likely catch last months Loto winners who will now doubt be half way through exchanging contracts + make offshore company purchase look a little more risky strategy to future buyers.
    Is he serious about tax evasion by the super rich? No, just firing off a few blank warning shots for display.

  • rate this

    Comment number 180.

    #177 FallingTP - that was a perversion of the real concern of the way the financial sector was crippling the economy. I am very familiar with this line of reasoning and it is partial truth at best. It does not address the 6 million unemployed and runaway inflation that gave extremism (on both sides) their political platform.

    This is really bankers trying to defend their right to their greed.


Comments 5 of 184



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