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Autumn Statement 2014: 'Complete reform' of stamp duty as Osborne slashes rate for 98 per cent of home buyers

Chancellor described stamp duty as a 'tax on aspiration'

Oliver Wright
Wednesday 03 December 2014 09:38 EST
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An eye-catching scheme to reform stamp duty and cut taxes for 98 per cent of home buyers was today announced as the centre piece of George Osborne’s last autumn statement before the election.

From midnight tonight homebuyers will only pay stamp duty on the proportion of the property price above new reformed thresholds.

The move will mean that someone buying a home for £275,000 will pay £4,500 less in tax. However the move will increase stamp duty for the most expensive houses – someone buying a £5 million house will pay nearly £200,000 more in tax.

Mr Osborne said the move would cost the Government £800 million a year but said the cost was worth it reform what he described as a “tax on aspiration”.

The move is designed to wrong-foot Labour and counter accusations that the Tories are a party on the side of the rich.

Mr Osborne contrasted his plan with Labour’s proposals for a new ‘mansion tax’ which he described as a shambles.

“It is a fair, workable, lasting reform to the taxation of housing,” Mr Osborne told the Commons. “It reduces the stamp taxes for 98 per cent of people who pay them in this country.

It increases the taxes on the most expensive 2 per cent but it only asks people to pay that tax when they buy the house and they have the money.”

Among the other measures announced yesterday were:

• Fuel duty will continue to be frozen. Air passenger duty for children under 12 will be abolished from next May and for children under 16 from the following year.

• The Income tax free personal allowance to rise to £10,600 rather than the planned £10,500 next year, giving wage boost of £825 a year to all workers.

• The higher rate threshold rises from £41,865 to £42,385 next year the first list in line with inflation for 5 years.

• A new 25 per cent ‘Google tax’ on tech companies that make money in the UK but shift their profits to low tax havens abroad.

• Limiting the losses from the financial crisis that banks can ‘write off’ against future tax to 50 per cent raising £4 billion for the Treasury over five years. Bank shares fell on the news.

Mr Osborne said the Office for Budget Responsibility (OBR) was predicting growth of 3 per cent this year - up from the previous estimate of 2.7 per cent.

But he admitted that Government borrowing this year would be nearly £5 billlion more than had been predicted in March – although this he claimed would fall in future years.

He insisted the Government’s overall plan to eliminate the structural deficit was on track to be completed by 2018.

"Now Britain faces a choice," he said.

"Do we squander the economic security we have gained, go back to the disastrous decisions on spending and borrowing and welfare that got us into this mess?

"Or do we finish the job - and go on building the secure economy that works for everyone.

"I say: we stay the course. We stay on course to prosperity."

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