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 169.

    The accountants will be around this within hours if not already.

  • rate this
    -2

    Comment number 168.

    162.Darren Shepperd

    I'm a Managing Director, the last time I played golf was about 3 years ago. Company lunches? I'm lucky if I get to eat a sandwich whilst still working at my computer. Why? Because I want the company to survive, to keep people employed. If you think it's that easy why have you not started your own business? Put your money where your mouth is, put your house on the line!

  • rate this
    +1

    Comment number 167.

    To Tsunami of logic #160. Bit of a malingerer yourself on here aren't you. Your name seems to be popping up more than once - got a bit too much time on your hands, maybe. Stop wasting time on here and practice what you tell us we should all be doing - working hard

  • rate this
    -1

    Comment number 166.

    This should be lowered to homes over £1million. To those people who say people are 'poor' because they cannot afford a home over £2 million pounds is absurd. If I knew someone who could afford a home worth over £500k I would not consider them to be 'poor'. People in professions like teaching and nursing are hardly what you call 'lazy' and they work harder than some people on higher incomes.

  • rate this
    +6

    Comment number 165.

    162 Darren Sheppherd

    I know it's tempting but don't waste posts on Tsunami of Logic .... he's a troll, somebody who deliberately posts ridiculous or extreme views in order to provoke a response. Radio programme about it this week ... low self esteem is reckoned to be the main indicator.

  • rate this
    +3

    Comment number 164.

    @123 Divots

    ''council tax should be based on number of people in house''

    I couldn't agree more, my council tax is £1400 - 25% single discount = £900. ( why isn't it a 50% discount? )
    House 2 doors up, exactly the same size with 4 adults using a lot more services Taxed at £1400 working out at £350 each. how is that fair?

  • rate this
    +3

    Comment number 163.

    BBC, why can we not have a debate about ALL the budget, why have you selected only certain subjects?

    I would like to raise comments relative to pensions but you are denying us this, why? Is free speach something you disapprove of?

  • rate this
    0

    Comment number 162.

    160.Tsunami of Logic
    not so much a sunarmi of logic but a sunami of stupidity.
    You really think directors who spend most of their time out on golf courses or on lavish company funded lunches really produce teh welth they claim do you?
    lets see them produce anything other than debt without the hard workers they sponge off.
    Just like the tories stealing everything for them and their rich mates

  • rate this
    0

    Comment number 161.

    Stamp duty is a terrible tax, creating artificial pinch points in house prices (would you pay £501K for a house??), and reducing mobility of the labour force by making it very expensive to move. It should have been scrapped not extended. Bad move (BTW, I am not an Estate Agent!!)

  • rate this
    -4

    Comment number 160.

    Let the slackers, idlers, shirkers & malingerers take up the slack for once. Time for them to put their shoulder to the wheel for a change!

  • rate this
    +1

    Comment number 159.

    Once again the budget misses out the middle folk who pay for everyone else’s benefits or bonuses while seeing their own standard of living fall. This happens no matter what flavour of government is in power. Where is our voice?

  • rate this
    0

    Comment number 158.

    NI should be abolished. It is an abomination of a tax that pretends not to be a tax, front loaded so that high earners hardly pay more than average earners. income tax should absorb it, oh wait you dont want to do that because it will expose how punitive our taxes are!

    slash whatever it takes to abolish NI and fuel duty.

    Set the country free from the tyranny of agressive taxes.

  • rate this
    +2

    Comment number 157.

    @133. No To NHS Privatisation

    "This is a budget for fatcats, bankers..."

    The increase in tax free allowance helps lots of people.

    "none of whom caused the worldwide recession"

    We all have to take some responsibility, the bankers who sold mortgages people couldn't afford, the government for poor regulation and us for maxing out on credit cards and supporting unsustainable public spending.

  • rate this
    -1

    Comment number 156.

    George should have ceased this opportunity to cut the public sector to a fraction of it's current size, abolished state benefits and closed the NHS down!

    This coupled with an assault on the myriad of legislation preventing businesses starting up or expanding (elf & safety, min wage) and a lowering of taxes (35p not 45p George!) would have provided the perfect environment for economic growth!

  • rate this
    -2

    Comment number 155.

    @136/150 Tsunami of Logic

    Why do you hate the less fortunate so much? Do you honestly think they're all lazy or you'll be better off if benefits were stopped? It is more likely to be the opposite as desperate people may decide to take what they need by force. I suppose you would introduce martial law, armed police & KGB/Gestapo style network. Bring on the fascist state (oops its here already.)

  • rate this
    +4

    Comment number 154.

    150.
    Tsunami of Logic

    You claim to be a non dom so how much do contribute to the Brit Economy. Perhaps it's your attitude that you are too important to be paying tax in the U.K. that needs looking at.

  • rate this
    0

    Comment number 153.

    Reducing the 50% tax rate is the best thing George Osborne could have done. It attracts investment into the country and gives incentives to business people to create wealth and jobs. Why can't the left see that? It is blindlingly obvious. So tired of all the left wing nonsense that people write on here. Go and get a book on economics and educate yourselves.

  • rate this
    -4

    Comment number 152.

    This is not what I expected from a Conservative chancellor. It may only affect a small number of property transactions, but it sends out a signal that the government is anti-aspirational. That's not why I voted Conservative. Lowering the top rate of income tax was a good start, but why cut one symbolic wealth tax and replace it with another? Time to get these pesky Lib Dems out of the way.

  • rate this
    -2

    Comment number 151.

    george,

    putting money in peoples' pockets means they have more to spend in the economy. We all know the cupboards are bare, which means a recovery can't possibly come from the public sector. USA proves that more disposable cash by low tax and less govmnt is the recipe. that's why we are foundering while they recover and they started from a position of more austerity than we'll ever have here!

  • rate this
    -2

    Comment number 150.

    Why are those who work hard & are successfull always expected to carry the dead weight of those too lazy to contribute to the UK's economy on their financial shoulders?

    Why can't the poor work abit harder and try to improve their lot rather than expect the rich to constantly dole out funds to keep them n larger beer?

 

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