Stamp duty to increase to 7%

Budget 2012: Chancellor George Osborne today confirmed that the government will raise the rate of stamp duty for properties worth more than £2m to 7%, and 15% for those bought through a company.
The current rate of stamp duty, set last year, is 5% on house sales of more than £1m.
The new 15% rate for properties transferred into corporate ownership is intended to tackle tax avoidance measures such as the purchasing of high- value homes through offshore companies in a bid to avoid paying stamp duty.
Osborne said: “Tax evasion and aggressive tax avoidance is morally repugnant. I have given plenty of public warnings that this should stop and now we are taking action.”
Osborne said that the government will consult on the introduction of an annual charge on residential properties valued at over £2m, with the intention of legislating in the 2013 Finance Bill.
He added that the government will extend the capital gains tax regime to gains on the disposal of UK residential property and shares or interests in such property by non-resident, non-natural persons.
Lucian Cook, director of residential research at Savills, said: “This is a clear signal that stamp duty remains the weapon of choice for taxing high- value property. On the basis of sales recorded by HMRC, my calculations are that this would raise an additional £314m in revenue. However, if this is combined with closing stamp duty avoidance, that figure rises to £436m.
“That would mean that £2m-plus properties would account for some 23% of stamp duty receipts from residential property, despite only accounting for fewer than one in 200 housing transactions in the UK.”

Keep up to date with the Budget as it happens and join our live debate >>