Stamp duty raid on £2m homes and a crackdown on offshore tax dodges

Published 21st Mar 2012

* 7 per cent top band for stamp duty on homes costing
£2million or more


A tax grab on wealthy homebuyers – almost all of them in London and the South East – will be unveiled in today’s Budget.

In an attempt to show that the rich will be squeezed when the 50p top rate of income tax is lowered, George Osborne will introduce a 7 per cent top band for stamp duty on homes costing £2million or more.

The move comes just 12 months after the introduction of a 5 per cent band on homes bought for more than £1million.

Statistics from the Land Registry show that the new top rate of stamp duty will overwhelmingly hit London buyers.

In November – the latest month for which figures are available – 121 homes were bought for more than £2million in England and Wales and 98 of these were in London.

The average asking price in one exclusive corner of London, the Royal Borough of Kensington and Chelsea, hit £2million for the first time this week.

A decade ago, the average asking price in the area was just £650,000. Those paying the new rate of stamp duty now face bills of at least £140,000. Before 1997 they would have paid little more than £20,000 because stamp duty was a flat 1 per cent.

There are thought to be around 80,000 homes in Britain worth £2million or more.

Mr Osborne will also use his Budget to announce a crackdown on property and inheritance tax avoidance. The Chancellor will close a loophole that has allowed wealthy homeowners to dodge stamp duty by placing their properties in overseas tax shelters.

More than £100billion of property in central London alone has been placed offshore beyond the reach of the taxman, costing the nation billions in lost revenue.

A Land Registry inventory of 18,700 title deeds shows that in some areas of London more than one in 20 properties are owned offshore. The dodge has spread across the country, with Manchester, Leeds, Derby and even Torbay among the locations for properties held in tax havens.

The schemes enable the rich to avoid stamp duty, as long as they are not resident or domiciled here for tax. Their heirs also avoid inheritance tax, charged at 40 per cent.

Experts say the loophole is cheating the Treasury out of up to £500million a year in stamp duty and as much as £1.3billion in inheritance tax.

Mr Osborne’s stamp duty shake-up arrives just a few days before first-time buyers lose a generous exemption from the tax.

The two-year holiday, which was introduced by Labour’s Alistair Darling in his final Budget, covered properties worth up to £250,000.

The 7 per cent stamp duty band is a watered-down version of Liberal Democrat plans for a mansion tax – pushed by Business Secretary Vince Cable yesterday. He suggested that owners of the 250,000 homes worth more than £1million should be charged an annual levy of 1 per cent of the property’s value.

Source: ' ThisIsMoney '

View All Latest News