Budget 2012: New stamp duty plans are outlined

 

Stamp duty rate rate rise on £2m plus properties

Properties sold for more than £2m will be subject to a new 7% stamp duty charge, Chancellor George Osborne has confirmed.

Mr Osborne also said that stamp duty on residential properties over £2m which were bought via a company would increase to 15%.

The chancellor said that those who bought the most expensive homes should contribute more.

He also wanted to tackle tax avoidance when people bought homes.

Millions raised

"It is fair when money is tight, and so many families could do with help, that those buying the most expensive homes contribute more," Mr Osborne said.

There are various rates of stamp duty land tax - paid by the buyer of a property - already in place, depending on the cost of the home.

Current stamp duty thresholds

  • 1%: Properties of £125,000 to £250,000, but first-time buyers are exempt until 24 March
  • 3%: £250,000 to £500,000
  • 4%: More than £500,000
  • 5%: More than £1m, residential property only

The changes, which take effect at the end of the day, only affect a relatively small proportion of home buyers.

The latest statistics from the Land Registry showed that, in November 2011, there were 121 homes sold for more than £2m in England and Wales. That accounted for just 0.2% of the 57,967 homes sold that month.

Of these 121 homes, 98 were in London.

However, the move is predicted by the Treasury to raise £150m in the next financial year, rising to £300m by 2016-17.

Avoidance

The government wants to put a stop to the way some people have avoided paying stamp duty.

There are two popular methods. One was by paying for chattels - fixtures and fittings - separately and, as a result, bringing the cost of the actual property below the £125,000 threshold.

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The second was by setting up a limited liability company to buy the property, which then immediately sold it back to the individual, or which pushed up the price when selling on to the next buyer. This is done by the owner selling shares in the company rather than the property itself.

The second method is the one that the chancellor is keen to clampdown on.

He has announced that the level of stamp duty on residential properties over £2m which were bought via a company would increase to 15% with immediate effect.

In addition, overseas companies that already own UK residential property worth more than £2m will be subject to capital gains tax from April 2013.

"This can only make the UK less attractive to overseas investors," said Toby Ryland, a senior tax partner at accountants Blick Rothenberg.

 

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  • rate this
    +4

    Comment number 29.

    They have gone soft on 'Child Benefit', no benefit should be paid for any children except the first 2 per household and any household income above £26,000 should reduce the 'Child Benefit' by £1 for every £100 earned.
    It is time to stop the easy life and reward workers by reducing tax and duty liabilities.

  • rate this
    +1

    Comment number 28.

    Thanks George for the crica £3.5K pay cut!!!!!

  • rate this
    -6

    Comment number 27.

    It looks as though the 7% applies to commercial properties also, which will have a marked negative impact on that market. It will hurt banks (who have lent billions on such property and need it repaid) and dissuade Institutions from investing in it (already transaction costs are higher than Shares and Bonds), so that people's pensions will become even more exposed to Stock Market performance.

  • rate this
    -2

    Comment number 26.

    When bought via a company would I would increase it 22.5% because its a scam.

  • rate this
    0

    Comment number 25.

    Not cutting fuel duty is crazy. It affects us all, drives up the cost of transportation which will lead to higher inflation longer term in real terms (Not the silly basket of iplayers thing, I mean food and heating fuel). The 50p top tax rate should have stayed in place. They say it doesn't raise much, so why not leave it there. The wealthy are laughing all the way to the 'offshore' bank.

  • rate this
    +6

    Comment number 24.

    A very sensible budget - I'm pleased to see that efforts are being made to close tax loopholes, coupled with a clear warning that any further loopholes in this area will be retrospectively closed - sends a strong message.

  • rate this
    +3

    Comment number 23.

    SO, according to George I'll be £170 a year better off after inflation. Thats £3.27 a week, my cup runeth over, how shall I spend it?
    Well this morning I got the bus instead of cycling because I wasent feeling too well (all right, I was hungover). £3.00 for a journey of less than 2 miles, problem solved.

  • rate this
    -2

    Comment number 22.

    Of course the better off will benefit. How can anyone argue otherwise. Can anyone explain how a 45% tax rate will generate more income than a 50% rate? Only the contrived minds in HMRC and OBR could argue this one. Tax avoiders will still avoid tax whether it is 45% or 50%

  • rate this
    +1

    Comment number 21.

    13.Mr Speaker 4 Minutes ago - Surely everybody who works is creating wealth? I know for sure that the profits my team make help to make our company`s owner very wealthy indeed.

  • rate this
    +1

    Comment number 20.

    Quick Recap - Topic for Debate - Stamp Duty! No references to other measures such as Fuel Duty, Tax Allowances etc.!!
    Anyway - Stamp Duty, I agree with what GO has done here. However, I have always thought that it should be graduated so you only pay the rate on the Value relating to the various thresholds. Not as it is, the rate on the full end Value. So in line with Income Tax theory.

  • rate this
    0

    Comment number 19.

    I have to agree with #10 Richard Sweeney

    I had planned on a new Bentley this year ....

  • rate this
    0

    Comment number 18.

    Not brave enough to open the entire Peasant Shoot, ummm I mean Budget, up to HYS, BBC? It's lucky for Osborne that most pensioners don't use the internet - and that, of course, they would't be able to afford it now anyway.

  • rate this
    0

    Comment number 17.

    Invoking Adam Smith shows Osborne's knowledge of his version of history but his ignorance of economics. Old testament economics doesn't hold the answers this time round. Where is the cheap fuel? Where are the men, women, children and horses all worked to death? Where is the empire? Where are the next innovations that will create employment?

  • rate this
    +1

    Comment number 16.

    I smoke, I drive, I'm skint.

  • rate this
    0

    Comment number 15.

    Middle earners robbed again, £200 a year saved from the £9000 Basic Allowance increase, however they lose £800 from the Basic Allowance limit Decrease from £34000 to £32000 pushing a further £2000 into the higher limit.

    Net loss of -£600... Nice one!

    Based on the above, I reckon as soon as he lifts the limit to £10,000, the Basic Rate will finish at £30,000!

  • rate this
    -3

    Comment number 14.

    The tax allowance may be going up to £8105 but he is reducing the 40% tax band by the same amount so anyone working their rocks off to get £42k (train drivers, senior teachers, sales managers) will get not a penny but may lose child benefit. Thanks a lot. What's the point of trying to do better for yourself? 2m non-taxpayers= 2m non contributors who don't need to care how our taxes are spent.

  • rate this
    -10

    Comment number 13.

    What a disgrace - penalsing wealth creators. We should be celebrating these people not hamering them at ever oppertunity. This is nothing but Lib Dem envy of successful hard working people

  • rate this
    +2

    Comment number 12.

    Labour will say the focus has been on helping rich, but they would say that wouldn't they. Trying to develop a class war narrative is a bit niaive - especially as they wouldn't seek to reintroduce anyway.

    This budget seems to be a good balance, although a shame about the fuel duty escalator. Pleased to see that everyone benefits from the rise in tax threshold too.

  • rate this
    -2

    Comment number 11.

    Old_Hat: the middle need to be squeezed, because poor people riot if you are too nasty too them. The £2 billion + that George is giving to people is going to the top earning 308,000 people in the country who earn over £150k, because they have more political sway than the rest of us. We voted for change and we got what we asked for!

  • rate this
    +6

    Comment number 10.

    This 7% stamp duty is nothing but a disgrace. I was planning on buying a yacht to go with the summer home I am planning on purchasing, but now I'll have to wait until next year for that little "luxury".

 

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