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£ million homes and above attract 5% duty
A change in the amount of stamp duty paid by those buying properties above £1 million will come into force on April 6th.
The rise in the amount of stamp duty payable was instigated by the Labour party and was to be used to offset the loss of tax revenue from the temporary scrappage of tax for first time buyers.
The rate will rise from 4% of the property value to 5%. The two year suspension of the one per cent stamp duty rate for first time buyers for homes bought between £125,000 and £250,000 ended this year.
In effect, the change to the buyer would be a whole £10,000 increase on a property valued at £1 million from £40.000 to £50,000.
There are around 12,000 buyers of £1 million plus properties who will be paying the higher tax rate each year. The extra revenue generated will be around £390 million from the higher rate until 2013. The amount of revenue lost to the tax office from a relaxing of the stamp duty for first time buyers would be in the region of £500 million.
Vendors of £1 million properties are likely to keep the sale price just below the million mark in order to attract more buyers who are unwilling to part with the extra cash.
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