As is now well commented upon, the Chancellor announced two changes to stamp duty land tax in his budget yesterday.
Firstly, a raising of the threshold over which duty is paid, from £125,000 to £250,000. That took effect at midnight last night and relates to first time buyers that have never owned a property before ‘anywhere in the World’ and is a two year respite. Previously, in 2008 albeit rather late into the house market downturn, the Government announced an increase in the ‘floor limit’ to £175,000 that ended on December 31st 2009.
Secondly, from the 2011/2012 tax year, stamp duty on residential property purchases above £1m will attract a levy of 5%. Previously this was 4% (above £500,000) and is now five times greater than in 1997 when duty applied at 1% across the board.
So that’s the factual stuff. ‘It’s ‘fair’, says Darling. Fair that some pay nothing, some pay 1%, some pay 3% (£250,001 to £500,000) some pay 4% (£500,001 to £1,000,000) and others 5% (above £1,000,001). Hmmm…
Notwithstanding the Robin Hood aspect there is something troubling me about the first time buyer caveat with regard to the two year uplift however.
And that is how on earth the Treasury know who is a genuine first time buyer, even if they insist that conveyancers tick a box to say they have asked?
Surely this aspect is impossible to police and therefore massively open to abuse?
Suffice to say that I have put a call in to HM Treasury and have spoken to three people so far none of whom seem to know. I now await a response from Mark Hitchrn in the ‘Policy Lead’ team to my query.
Let’s see if I get a reply.