The Chancellor has confirmed in the Budget that homes worth more than £2m will face a new Stamp Duty rate of 7%, with 15% levied on homes over £2m bought through a company.
The 15% stamp duty will be effective immediately and aims to close down a loophole whereby properties owned by companies do not face stamp duty when sold.
Chancellor George Osborne has also announced it plans to consult on introducing a “large annual charge” on £2m homes which are already bought through companies. Osborne said capital gains tax will also apply on residential properties through overseas companies. The Government will also close a loophole which allowed people to avoid stamp duty through sub scale relief by putting their home in a trust. Currently Stamp Duty kicks in at £125,000 and is charged at 1%, rising to 5% on properties worth over £1m.
Delivering his Budget speech in the House of Commons this afternoon George Osborne also spoke out against the practice of high earners finding ways to avoid paying tax. He said: “It was the boast of some high earners that they were paying less tax than their cleaner. I regard tax avoidance as morally repugnant.” Osborne said the Government will consult on introduing a general anti-avoidance rule in the UK, with the aim of bringing in legislation through next year’s finance bill.
The stamp duty move is part of a compromise between the Coalition parties to deliver a quicker rise of the personal allowance towards £10,000. The rise in Stamp Duty will mean that the minimum tax on a property worth more than £2m will rise from £100,000 to £140,000. Stamp Duty on a property worth £5m will rise from £250,000 to £350,000.