George Osborne has said stamp duty will be cut for 98% of homebuyers in his Autumn Statement to the Commons.
The chancellor said that from midnight the current system, where the amount owed jumps at certain price levels, would be replaced by a graduated rate, working in a similar way to income tax.
He admitted borrowing would be higher than forecast but claimed the UK would be “into the black” by 2019/20.
Labour said his deficit reduction targets were “all in tatters”.
BBC political editor Nick Robinson said the headline announcements were “real electioneering” by the Conservative chancellor, saying the stamp duty proposals were the Tories’ “own version of the mansion tax” proposed by Labour and the Lib Dems.
The new stamp duty rates will only apply to the part of the property price that falls within that band, so there will no longer be a huge jump in stamp duty, for instance, on a property costing £500,001.
People currently in the process of purchasing a home could choose which regime to operate under, Mr Osborne said.
Under the new rules, no tax will be paid on the first £125,000 of a property, followed by 2% on the portion up to £250,000, 5% on the portion between £250,000 and £925,000, 10% on the next bit up to £1.5 million and 12% on everything over that.
| Example properties | Tax paid under old rules | Tax paid under new rules | Change in tax paid | Effective tax rate under new rules |
|---|---|---|---|---|
| £125,000 | No stamp duty | No stamp duty | No stamp duty | No stamp duty |
| £185,000 | £1,850 | £1,200 | Saving £650 | 0.7% |
| £275,000 | £8,250 | £3,750 | Saving £4,500 | 1.4% |
| £510,000 | £20,400 | £15,500 | Saving £4,900 | 3% |
| £937,500 | £37,500 | £37,500 | No change | 4% |
| £2,100,000 | £147,000 | £165,750 | Increase £18,750 | 7.9% |
The Treasury said someone buying a property at the average family home price of £275,000 would save £4,500, while a £2.1m purchase would carry £18,750 more stamp duty compared with the old system.
The head of the Office for Budget Responsibility, Robert Chote, said stamp duty reform could put up house prices in some areas, predicted prices would rise where the tax had fallen, and fall where it had risen.
Mr Osborne said the tax cut, which is UK-wide until April when stamp duty is devolved to Scotland, was worth £800m a year.
Article originally posted by BBC. http://www.bbc.co.uk/news/uk-politics-30291460
