Buyers of homes worth more than £2m will be hit with a massive stamp duty rise from today, with a new 7 per cent rate. Until yesterday, they paid the 5 per cent charge levied on homes sold for more than £1m.
The charge on a £2m property will rise from £100,000 to £140,000. But the hike – supposed to help pay for higher income tax personal allowances – was condemned by estate agents as putting the tentative recovery in house prices at risk and disproportionately hitting London and the South-east.
In addition, the Chancellor moved to close a major stamp duty loophole which allows individuals to pay a much-reduced rate of tax by using an offshore company to buy property. In future, anyone looking to buy a residential property through an offshore company will face a one-off tax of 15 per cent – more than twice the level of the new higher-rate stamp duty.
Paul Emery, tax director at PricewaterhouseCoopers, said that the Chancellor was "throwing the book at avoidance" and giving a "strong signal that residential property sales cannot escape tax". Those that have already benefited face a retrospective tax charge, the Chancellor warned.
Peter Rollings, chief executive of estate agent Marsh and Parsons, said: "This stamp duty rise risks deterring prime property transactions, thereby undermining the Government's stamp duty tax take – as well as limiting London's appeal. We need to see the Government supporting activity at all levels, rather adding yet another tax burden."