The Chancellor George Osborne has pledged to put an end to stamp duty avoidance by hitting companies purchasing properties worth over £500,000 with a levy of 15 per cent of the purchase price.
Delivering his fifth Budget today, Osborne said the new tax would come in from midnight tonight and would not apply to properties rented out to tenants.
In the 2012 Budget, Osborne announced that homes worth more than £2m would face a stamp duty rate of 7 per cent.
Osborne said: “We are expanding the new tax we introduced to stop people avoiding stamp duty by owning homes through a company. We will expand the tax on residential properties worth over £2m to those worth more than £500,000.
“And from midnight tonight anyone purchasing a property worth over £500,000 through a corporate envelope will be required to pay 15 per cent stamp duty. None of this applies to homes that are rented out. Many of these are empty properties held in corporate envelopes to avoid stamp duty. This abuse will end.”
Presently, borrowers purchasing a home under £125,000 are exempt from paying stamp duty. It is then taxed at 1 per cent of the purchase price between £125,001 and £250,000; 3 per cent between £250,001 and £500,000; 4 per cent between £500,001 and £1m; 5 per cent between £1m and £2m and 7 per cent over £2m.
Stamp duty revenues are predicted to rise to £6.7bn in 2013/14, according to a recent analysis by Halifax.
However, some in the mortgage industry were disappointed the Chancellor did not use the Budget to announce a wholesale reform of stamp duty.
Crown Mortgage Management director Godfrey Blight says: “What we really need to see is a sustainable move on stamp duty to get more people selling to increase supply and ease house prices from over-heating. It is a little disappointing from a mortgage market perspective and could be a missed opportunity.”