20 March 2014
Budget Sees Stamp Duty Increase
In his Budget speech earlier this week, chancellor George Osborne announced that stamp duty will increase during the coming financial year, with the UK's wealthiest property owners set to be hit hardest.
This will have come as something of a surprise to some industry experts, who thought the government may have taken measures to reduce the amount of stamp duty new property buyers would be required to pay.
Until now, only those with residential properties worth more than £2 million have had to pay the tax, but the government has decided all those with houses valued at £500,000 or over will be forced to pay 15 per cent in stamp duty.
Making his announcement, the chancellor said, "Anyone purchasing residential property worth over half a million pounds through a corporate envelope will be required to pay 15 per cent stamp duty."
Wealthier members of the UK's population will be hit hardest by this increase in stamp duty, as it will be placed on all properties purchased through a company, meaning even those bought for investment reasons by overseas buyers will face a 15 per cent tax.
Prior to this, foreign investors have often purchased their properties through British-based firms to avoid stamp duty, but Mr Osborne has now closed this loophole.
The chancellor said, "Many of these are empty properties held in corporate envelopes to avoid stamp duty. This abuse will end."
Both house prices and demand for new properties have increased significantly in recent months, with the average cost of a British home rising by 7.9 per cent to £179,872 during the last year alone.
In addition to this, the past 12 months have seen construction firms begin to recover following the recession, responding to the British population's wishes for new homes to be built, which has been encouraged by the government's Help to Buy Scheme.
With prices on the up and more homes being built to meet demand, an increasing number of homes could be faced with a high stamp duty tax in the near future.
By Francesca Witney
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