Osborne vow over stamp duty avoidance

Chancellor George Osborne has committed to use the forthcoming Budget to crack down on stamp duty avoidance by people buying and selling homes.  He said that he found it ‘unacceptable’ that wealthy people were able to avoid the levy.  

“We’ve already taken measures to make sure the tax system is fairer”, he told Sky News.  “I increased capital gains tax for wealthier people in my first budget and I have taken action on stamp duty avoidance and that’s something we are definitely looking very closely now.”

Ministers are concerned that law firms and specialist websites help homebuyers to use the legal loophole to avoid paying stamp duty.  People buying a home worth more than £1m have to pay the upper level of stamp duty at 5%, while homes in the £500,000 to £1m bracket attract a 4% levy.  Many avoid the tax by transferring the deeds to offshore companies, which are then bought by the purchaser – a strategy estimated to cost the Treasury up to £1bn a year in lost revenue.

This latest crackdown on tax avoidance is a key pledge of the coalition government to end ‘industrial scale tax avoidance’ whilst helping to increase the threshold at which the lowest earners start to pay tax.

Mr Osborne said that the government would publish an Inland Revenue study into the 50% upper income tax bracket on the day of the Budget.  The results will be carefully examined by those advocating that the 50% rate be scrapped because it simply encourages the well-off to use avoidance measures.

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