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
    -1

    Comment number 49.

    36.Andy Wood

    Sounds like a good idea. Unfortunately you are striking at the very core of what keeps this country going. An attack on the hard-earned benefits of buying and selling a house at the right time...whatever next.

  • rate this
    0

    Comment number 48.

    Secretbanker the point is not simply a question of whether or not we should rob from the rich to pay to the poor, there are many reasons why taxing ever increasing rates based on income does not work, as when state benefits provide more income than a minumum wage job would, you remove all incentive to work hard. If we continue to drive the higher earners out of GB we will all be sorry...

  • rate this
    +6

    Comment number 47.

    There's currently quite a big shortage of housing. Anyone wealthy enough to afford a £2m house with all the land & square feet/metres that involves can very likely afford 8% stamp duty - or 15% for a (large) business.
    Do stop whining.

  • rate this
    -12

    Comment number 46.

    How about a wealth tax based on paying a percentage of the increase in value of your property each year. The amount that the increase would be assessed at would be the average property price increase in each region as registered on the land registery.

  • rate this
    +1

    Comment number 45.

    I just don't see how two people earning £30K each in the same house hold should collect child support when one earning £60K gets zilch. I thought somebody paid a lot of money for these clowns to get educated. doesn't say much for the Public School system does it!!!!

  • rate this
    +9

    Comment number 44.

    In any budget there will be winners and there will be losers but you need to look at the measures as a whole, as opposed to cherry picking the ones that suit your political and idealogical leanings, to see the full picture.

    No doubt the BBC headlines will concentrate on items which match their own political bias such as the reduction in the 50p tax rate though.

  • rate this
    +4

    Comment number 43.

    35 rifra he wouldnt be able to answer as he has only been in office for a couple of years.

    31 Chris 888 did you even watch the budget?

  • rate this
    +1

    Comment number 42.

    The Socialists are coming out in force again - nothing positive - all negative. No wonder the country is in such a mess anything north of Sheffield and south of Edinburgh - negativivity strikes again, try very hard to be politically neutral for a change. It will help you make it through the night - sleep well - relax and enjoy life you only have one life - one chance - get on with it !

  • rate this
    +5

    Comment number 41.

    for those that bark on about "giving more to the rich" nothing is being given, they are just keeping more of what they have earned.

  • rate this
    -2

    Comment number 40.

    Yet another budget, were the average working person is worse off!! The tax allowance being raised makes no difference to me, as petrol will increase and ill be £500 worse off this year in extra pension increases. Where is the incentive to work in this country? the rich get richer and folk on benefits get increases and a guarantee of a pension in later life. If i could emigrate i would!!

  • rate this
    -1

    Comment number 39.

    #29
    Spoken like a True Single Man! Not an ounce of "Family" Envy there!

  • rate this
    0

    Comment number 38.

    So, Gideon is cutting the 50% tax rate to 45% next year.
    How many of those on the 50% rate now, will be contacting their accountant to have this year tax payments deferred until next year?

  • rate this
    +1

    Comment number 37.

    Horse and stable door come to mind. The 15% stamp duty on houses bought by a company will only apply to houses not already owned by companies, so will only discourage this practice going forward, and even then, will only be a once off charge, as once it's owned by a company, the house itself never gets sold again, just the holding company.

  • rate this
    -2

    Comment number 36.

    Stamp Duty: Why not flip it around so you pay some percentage of the _profit_ when you sell your house?
    First Time Buyers would always pay nothing, and in a downturn if you've lost value on your property when you sell you don't get kicked in the teeth again by the treasury!

  • rate this
    0

    Comment number 35.

    I would just like to ask the Chancellor why it has taken decades for the "offshore" companies stamp duty and SDLT fiddles&frauds to be tackled by HMG. For years chain after chain of back-to-back transfers to overseas companies of hugely valuable properties have been registered at the Land Registry without duty ever paid, and for what?To stimulate the housing market.. dont make me larf.

  • rate this
    -1

    Comment number 34.

    Cut out all the Budgie froth & bubble, the core philiosophy of the Conservatives is to gain as much money as possible, and then by any means open to them, they try to keep it. I sat and listened to that same implicit mantra over & over again today, throughout the whole of Ozzy Obsourne's excuse for the delayed tax regime for high "earners".

  • rate this
    -2

    Comment number 33.

    Brilliant idea! Just done the maths, if each of those 121 homes sold for £2mil, then based on this proposal that would raise £16,940,000 in one month! If that was continued over the 12 months then the £150million would be more than covered in the first year!

    If this did well this could offset other increases such as fuel duty! Never thourght I'ld say it but well done to the LibCons!

  • rate this
    -2

    Comment number 32.

    Good

  • rate this
    -1

    Comment number 31.

    I smell a rat. Of all the new measures brought in by this far-right government, we are discussing one hwich cons some into thinking they are fair?

    Steal from the average man and woman to give to the rich is all the Tory party know. How they get away with it is solely due to their ownership of the media.

  • rate this
    +5

    Comment number 30.

    @9
    Your objection does not hold water. If the Chancellor threatens retrospective action on any loophole, they won't dare. Valid example is Singapore QROPS.

 

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