Budget 2012

Stamp duty: Estate agents voice fears as plug is pulled on the rock star's property trick

 

Buyers of homes worth more than £2m are going to be hit with a massive stamp duty rise from today, with a new 7 per cent stamp duty land tax charged. Until yesterday, only a 5 per cent charge was levied on homes sold for overa £1m.

The charge on a £2m property will rise from £100,000 to £140,000. But the hike – which is supposed to help pay for higher income tax personal allowances – was quickly condemned by estate agents as putting the recent 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 rather than doing it in their own name. The rock stars and Sir Bob Geldof and Sir Mick Jagger and the businessman Lakshmi Mittal have been some of the more high-profile names to use these tax avoidance schemes, but hundreds of Britain's most expensive properties have been sold this way.

In future, anyone looking to buy a residential property through an offshore company will face a one-off tax charge 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 a "strong signal that residential property sales cannot escape tax".

Those that have already benefited face a retrospective tax charge, the Chancellor warned, a move already being dubbed the "Geldof tax".

"The hundreds of UK and foreign buyers who have avoided stamp duty this way face a massive bill from next April, with capital gains tax being charged when they sell and the possibility of an annual levy," said Toby Ryland, partner at the accountancy firm Blick Rothenberg. "The only option they will have is to unwind these schemes and pay the stamp dutythey owe."

Peter Rollings, chief executive of the 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. With the property market still far from healthy, we need to see the Government supporting activity at all levels, rather adding yet another tax burden."

Other agents warned that the new higher stamp duty will hit not just the rich but all those currently in a chain.

"Every homeowner will feel this, not just the wealthy," said Trevor Kent, former head of the National Association of Estate Agents. "Seventy per cent of first-time buyers rely on the successful progression of 'chains' of sales. If someone at the top of the chain sees they are getting clobbered they may not complete and the house of cards collapses."

Independent Comment
blog comments powered by Disqus
Top stories
News in pictures
World news in pictures
UK news in pictures
UK news in pictures
More stories
       
Independent
Travel Shop
Lake Como and the Bernina Express
Seven nights half-board from £749pp Find out more
Dubrovnik and the Dalmatian coast
Seven nights half-board from only £859pp Find out more
Prague city break
Three nights from only £199pp Find out more
 
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

FX Options Front Office Java / C# Developer

£500 - £600 per day: Orgtel: FX Options Front Office Java / C# Developer - Ba...

Project Manager - Front Office - Regulatory IT

£600 - £700 per day: Orgtel: Project Manager - Front Office - Regulatory IT C...

Lighting Design Engineer

£33000 - £35000 Per Annum: The Green Recruitment Company: The Green Recruitmen...

Are you an Primary NQT looking for your first role in Essex?

£21000 - £22000 per annum: Randstad Education Chelmsford: NQTs required now fo...

Day In a Page

Babies behind bars: A Palestinian fertility doctor has become an unlikely hero by helping women conceive – even though their husbands are in jail

Babies behind bars

A Palestinian fertility doctor has become an unlikely hero by helping women conceive – even though their husbands are in jail
Sonic youth: The high-pitched sound alarm for under 25s

Sonic youth: The high-pitched sound alarm

Is Mosquito, the alarm only under-25s can hear, a blessing or a bane?
The art of living in small spaces: Architects are learning how to make less, more

The art of living in small spaces

Space in cities at a premium so architects are learning how to make less, more...
Special report: The story of Sir Mervyn King's reign at the Bank

The story of Sir Mervyn King's reign at the Bank

After four 'nice' years as Governor of Bank of England, things turned decisively nasty
Zombie nation: Our enduring fascination with a world full of death and destruction

Zombie nation: Our fascination with death and destruction

A new season of shows on Radio 4 is inspired by dark tales of future dystopias. Meanwhile, zombies are marauding in the multiplexes...
Martin Stephen: 'Ofsted says comprehensives are failing the most able but teaching bright children isn't rocket science'

'Teaching bright children isn't rocket science'

It doesn't take a selective system to nurture the best minds, says a former head of St Paul's boys' school.
The retail empires strike back: Can new technology lure us back to the high street?

Can technology lure us back to the high street?

The high street has been bruised and battered by online firms but in-store technology is helping to enliven the retail experience...
The 10 Best new smartphones

The 10 Best new smartphones

Photos, films, music, apps and browsing - the latest mobiles can do it all
Jenson Button: Downbeat driver cannot wait to put season behind him

Jenson Button: Downbeat driver cannot wait to put season behind him

McLaren man admits 'failed gamble' with car has left him pinning hopes on 2014 campaign
James Lawton: Firmer fist will be required to win Champions Trophy final battle with stouter foe

James Lawton

Firmer fist will be required to win Champions Trophy final battle with stouter foe
'To farm I have to rape the countryside. It’s got to be wrong': The true effect of the badger cull

The true effect of the badger cull

'To farm I have to rape the countryside. It’s got to be wrong'
Theatre review: Daniel Radcliffe gives an admirably honest performance in Michael Grandage's The Cripple of Inishmaan

First night: The Cripple of Inishmaan

Daniel Radcliffe gives an admirably honest performance in Michael Grandage's comedy
Girls Guides drop religious reference but pledge to self and the Queen

Guides drop religious reference but pledge to self and the Queen

After 103 years, organisation changes oath to welcome 'all girls, of all faiths, and none'
Steve Tongue: Joe Kinnear was one of the boys and a breath of fresh air... 21 years ago

Steve Tongue

Joe Kinnear was one of the boys and a breath of fresh air... 21 years ago
Chris Froome: Free from 'pain in neck' after Bradley Wiggins' exit

Chris Froome: Free from 'pain in neck' after Wiggins' exit

Sky's lead rider says he is in fantastic form for the Tour and happy pecking order debate is over