The loophole that allows wealthy individuals to dodge Stamp Duty on expensive property transactions by buying through offshore companies is to be closed.
A 5% Stamp Duty is to be imposed on such transactions, rather than the 0.5% currently paid.
This would make it the same amount as is now paid on transactions involving £1m-plus properties.
The move is revealed in the draft Financial Bill which follows the Autumn Statement.
Meanwhile, the decision to end the Stamp Duty holiday for first-time buyers has been defended by housing minister Grant Shapps.
He said the Government could not afford to extend the exemption after next March.
He told the Commons: “As has been said so many times from the dispatch box … the country was seriously in danger of going bust.
“To do nothing about that, to add to the deficit, and to assume that the solution in every instance is to spend more money or introduce an additional programme to enable it to be spent, is not the answer.”
He added that the new 95% mortgage indemnity scheme for purchasers of new homes would help ‘up to 100,000 people’ on to the property ladder.
According to the Office for Budget Responsibility’s forecasts, the scheme will result in 30,000 additional property transactions.
Comments
"Why rush to beat its end and pay more for the house when you can save more than the stamp duty after. " wise words from the potential First Time Buyer - Brit
@PeeBee - whats up didn't this market figure in Rich Dad Poor Dad or something? :P
24 March 2012
"As a first time buyer I don't mind the stamp duty cost"
Brit - let's get something straight, okay?
YOU ARE NOT - REPEAT NOT - A FIRST TIME BUYER!
A first-time buyer is someone who has BOUGHT something for the first time. The clue is in the words.
At BEST, you are a POTENTIAL first-time buyer.
At worst... you are you.
My Grandson will buy a property before you will, I have little doubt - and he is FOUR YEARS OLD.
You will ALWAYS be looking for the reasons why it is a BAD decision to buy - and always find plenty of them, rather than the ONE reason you need TO buy...
...because you want to.
I am certain that particular reason does not exist as far as you are concerned - and I doubt it ever will.
This is worth a look
http://www.channel4.com/programmes/britains-trillion-pound-horror-story/4od
Apart from getting across simply how high our debt is and how disconnected people in government are from what they actually do with OUR money etc. - there is a nic e piece on Hong Kong - they have a very low tax rate and a booming economy. It's just that our politicians are wedded to the idea that the state must be bigger than the private economy - which, at the moment, it is.
As a first time buyer I don't mind the stamp duty cost. I have always factored it into my costs. My sense behind that is that I will buy when prices are right not because an end of a short term gimmick.
The effect will be possibly higher prices before its end in the traditional spring bounce and bigger price falls after.
Why rush to beat its end and pay more for the house when you can save more than the stamp duty after.
What I did want to see is a mansion tax for all the avoiders. Instead we have just got a close of a loop hole. This however will still see a fall in London prices which thankfully now falling anyway.
I don't get why Shapps doesn't realise that if he stepped stamp duty to the existing price ranges he would probably double transactions, do away with the need for people to take tax avoidance measures, help first time buyers, continue to penalise the rich and raise more tax income as a result.
WIN WIN
"What would happen to UK house prices if it became illegal to buy a property with borrowed money? "
Rantrave clasic, enjoy!
I'm in agreement with everyone thus far :)
@Hawkeye -
what Shapps knows about housing isnt worth knowing ;)
@Puzzled
Absolutely agree - the higher the transactions and volumes the more moeny circulates More VAT revenue, More kitchens, More Bathrooms, More Carpets, More..... More.... More so why is "someone" sticking their stick in the spokes - who knows eh ?
@RantandRave - agreed - no one can build if land values were to ever drop heaven help us - no margin is there (but they are dropping arent they!)
@RayEvans - I know we not always see eye to eye so to speak due to you having all your money tied up in your family home but you are right wars are terrible and a waste of human life - Unfortunatley any historian will tell you that the way to fight them is to raise taxes to pay for arms. A bit like blair/brown did by pouring sh*** money into our country and underselling our gold reserves. War costs money and lets face it the UK has always been at war with some poor natural resource rich country since the second world war. No doubt we will see much poverty under the tories and then labour will save us and start a war with someone- it justre-cycles all the time doent it?
@FunBoyAgent - great quote - after all there is no govenment like no government as Belgium are proving
As this site no doubt gets read by morons from the departments of our elected chosen ones - with algorithms that can predict what I will eat for breakfast tommorrow - I cannot believe that for one second that this isnt being orchestrated and that you cannot resolve this mess thats been going on a little too long now.
Now all I need it PeeBee to comment on "stamp duty? get that down the post office dont u ?"
Mr Shapps reportedly said "I have good news and bad news. The good news is, we have enough money to pay for our new building program. The bad news is, it's still out there in your pockets."
George Bernard Shaw
A government that robs Peter to pay Paul can always depend on the support of Paul.
Immediately stop spending our money on Libya, Iraq, Afghanistan and other assorted countries etc. etc. - all of which will gain us nothing. We would then be rolling in it!
(Sorry, nearly forgot - and the EU).
As is apparent, I am a fully paid up Lib Dem. ;>)
They're finding money to keep 300,000 families in houses they can no longer afford, re the Support for Mortgage Interest scheme.
Money found down the back of the sofa is also being given to builders to encourage them to actually build on the land they are hoarding.
From the article: 'He said the Government could not afford to extend the exemption after next March.'
I wonder if that should have read ... 'could not afford to NOT extend the exemption'
Like it or not a healthy housing market (high transaction numbers) is vital to our economy. When people move - as well as stamp duty - a lot of money moves through the economy - as they redecorate, do up, fit kitchens, bathrooms, carpets etc. etc.
I would suggest that removing stamp duty on property transactions would see a net gain to the revenue.
But, removing taxes and setting the econony free to grow does not seem to be on any political party's agenda. The fact is that in our economy, you need people to spend money. It has been proved, over and over again, that low tax rates produce more tax but governments seem unable to grasp the nettle and slash taxes. They'd have to borrow more while the velocity of money in the economy picks up - but, at the moment, they are borrowing more to pay more unemployment benefits.
Shapps - better go back to infant/junior school and learn how to do sums you idiot.
How do 'They' get this information?
Do they keep it on file?
Did they pay £35