Is a 7% stamp duty a workable mansion tax?
- 21 March 2012
- From the section Business
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.