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Home / World Business / 12% tax on UK properties worth $1.91m termed disaster, homes worth £1.5m to pay 10% stamp duty
12% tax on UK properties worth $1.91m termed disaster, homes worth £1.5m to pay 10% stamp duty

12% tax on UK properties worth $1.91m termed disaster, homes worth £1.5m to pay 10% stamp duty

LONDON: The UK government’s decision to place a 12 percent tax on properties worth more than £1.5 million ($1.91 million) is a “disaster” for the country’s luxury homes market – particularly in London, real estate agents warn, reported CNBC.

UK finance secretary George Osborne announced a series of reforms to the country’s controversial “stamp duty”, a tax paid when buying a home, when delivering his “Autumn Statement” Wednesday on the state of the country’s UK economy.

While the reforms have been cheered by many as they make the process of house-buying more affordable for 98 percent of buyers, according to Osborne, those in the high-end property market will be hit by a higher tax rate that luxury agents call a “disaster.”

The new rates mean that buyers pay no tax on properties up to £125,000 in value, then 2 percent on houses worth up to £250,000 and 5 percent up to £925,000. Homes worth up to £1.5 million, however, are now subject to a stamp duty of 10 percent and there is now a 12 percent on any property worth more than that. The changes came into effect at midnight on Wednesday.

“A £5 million pound house will see its stamp duty rise from £350,000 to £514,000 – but of course, this is a charge that is only paid once, when the property is bought,” Chancellor Osborne told U.K. members of parliament Wednesday.

Crucially, the reforms could mean that a proposed “mansion tax” — an annual levy on properties worth over £2 million — proposed by the opposition Labour Party, could be shelved. That proposal provoked concerns among luxury property specialists angry reactions from high-profile personalities with even Angelina Jolie commenting on the tax.