GEORGE Osborne will today launch a new tax raid on Britain’s wealthiest property owners by raising the level of stamp duty on the priciest homes.
He will use his third Budget to increase the stamp duty payable on property transactions worth more than £2m, in a move that stops short of an annual “mansion tax” but may go some way to appeasing Liberal Democrats unhappy at his decision to cut the 50p top rate of income tax.
The chancellor will announce a rise in stamp duty to seven per cent on properties worth more than £2m. Previously, all properties sold for more than £1m incurred a five per cent levy.
It will be seen as a tax on London and the south east, with the boroughs of Westminster and Kensington & Chelsea likely to feel the greatest impact. The move will allow Osborne to slash income tax on those earning over £150,000 a year while claiming to pay for the hit by clobbering millionaire property owners.
Last night it appeared Osborne was also considering doubling the proposed 1p cut in the rate of corporation tax, from the current 26p. Such a move – to 24p, rather than the expected 25p – would be welcomed by businesses.
Osborne is also expected to confirm in his Budget speech at 12.30 a well-trailed plan to clamp down on schemes used to avoid paying stamp duty on house deals.
The Budget will cheer many Conservatives with confirmation of a 5p cut to the 50p top income tax rate, which was brought in three years ago by then-chancellor Alistair Darling at the height of the financial crisis.
Yesterday, however, the exodus of bankers to Switzerland due to the 50p rate appeared to be slowing. The number of British bankers moving there was 320 last year, down from 383 in 2010, according to Swiss Federal Migration Agency figures reported by Channel 4 News.
The stamp duty cut will help to raise an extra £1.5bn and enable the Treasury to meet a key Lib Dem demand to spare up to 2m of Britain’s lowest paid workers from paying tax.
Osborne will do this by accelerating changes to the level at which Britons start paying tax, known as the personal threshold, to £9,000 from April next year, affecting around 20m people in total. The threshold is currently set at £7,475 and had been due to rise to £8,105 for 2012-13.
The chancellor will also attempt to reduce the pain from his scheme to scrap child benefit for higher rate taxpayers by unveiling a modified version of his plan.
Yesterday Nick Clegg, the deputy prime minister, said he wanted the Budget to relieve the tax burden for people on low and middle incomes who are “feeling the pinch and struggling to make ends meet”.
But experts said a new property tax would make London less attractive to skilled workers and dent its global standing. Sue Foxley, head of research at Cluttons, said: “Three and four bedroom family homes in popular London locations such as Islington and Paddington are expected to reach £2.6m and £1.6m respectively by the end of 2017... Family homes in Highbury... and two-three bedroom flats in Pimlico are projected to be within 15 per cent of the £2m threshold.”