If you’re buying a house, or thinking about it, there’s only one fact you need to know about today’s Budget: stamp duty is changing. Gone is the old system of thresholds, and instead it will be a percentage chunk of the value. And no, this ist a disguised tax graph – the Chancellor expects to lose more money out of this reform than any other.
So no tax will be paid on the first £125,000 of a property. Then it’s 2% on the portion of the value of the flat up to £250,000, then 5% of the portion up to £925,000, 10% for up to £1.5 million and 12 % on everything beyond that. The new regime is above. And you’ll note that this is also George Osborne’s answer to mansion tax – he’ll tax the purchase of multi-million pound properties a lot more.
And the distortion created by the old regime is shown in the graph below.
And the sneaky thing? As we all know, house prices are rising quickly – but there are no plans to update these thresholds. The Treasury’s figures are based on them staying the same through to 2020, so its banking on a lot of homebuyers being caught in fiscal drag.