George Osborne has announced an overhaul of stamp duty, in what is being seen as an attempt to take the thunder from Labour’s mansion tax plans announced earlier this year.
Speaking yesterday (4 December) at the House of Commons, George Osborne announced the changes alongside other key points of the highly-anticipated Autumn Statement, the last before next year’s generation election.
He claimed that 98 per cent of home-buyers would pay less duty under the new system, with lower payments at the bottom subsidised by higher payments at the top. It will mean a reduction of stamp duty of £4,500 on a house worth £275,000.
From today (5 December), stamp duty will no longer be subject to ‘slabbed’ percentage rises, depending on the house value – a system in which stamp duty jumped in percentage when a house price surpassed set thresholds. Instead, the new system will be based on a graduated rate, which applies the appropriate threshold rate on the value up until the next threshold, similar to how income tax currently works.
For example, on a house worth £250,000, a buyer would pay 0% up until £125,000, and then 2% up until £250,000.
Whilst many may save money due to the new scheme, the changes also mean that those purchasing properties worth more than £937,000 will pay additional duty. This means that house properties may rise at the bottom, but those at the top will almost certainly enter a cooling-off period.
The Conservatives have claimed that the plan represents a more ‘progressive’ form of Labour’s mansion tax, which places greater burden on house prices at the top of the market.