editor posted on April 16, 2010 05:06
The last budget to be delivered by the present Government was largely bereft of major initiatives and contained little or no detail of how the UK’s huge debts were to be repaid and where the inevitable spending cuts in public services would be instigated. With a General Election widely anticipated for May 6th, this budget was always going to “hold back” on delivering any real further pain to voters. After all, whether you consider the current Government to be a bunch of turkeys or not, they were unlikely to find themselves voting for Christmas!
Alistair Darling clearly therefore had little room to maneuver and the majority of planned tax increases such as National Insurance and Fuel Duty had been detailed in the pre budget report.
The traditional targets of cigarettes and alcohol were hit with duty increases and there were some relatively minor concessions on business rates, university funding, money for pot holes and work or training guarantees for the under 24’s.
The only real “headline grabber” was one that directly impacts on the housing market.
Stamp duty for first time buyers was removed completely on purchases up to £250,000. The definition of a first time buyer perhaps needs further clarification but is said to mean anyone who has not previously owned a property anywhere in the world. This change came into effect immediately and has been set for a two year period until March 25th 2012.
Also announced was an increase in stamp duty on property transactions above £1 million where the rate will increase to 5% of the total amount. This change however does not come into effect until March 25th 2011.
These changes in stamp duty by the Chancellor are also a clinical lesson in “stealing” policy from the two other main parties as the Tories had widely promoted changes to the first time buyer levels of stamp duty and the Liberal Democrats had talked of a “Mansion Tax” on the highest property values.
Clearly for first time buyers it is good news although the real issue for the market is the availability and affordability of mortgage funding. Having signaled a year’s grace before the 5% level of stamp duty comes in to force, it will be interesting to see whether this promotes an increase in high end transactions in the coming months with buyers eager to avoid paying the additional £10,000 plus tax.
Stamp Duty on a property purchase now looks more complex and is as follows:
Up to £125,000 = 0%
£125,001 - £250,000 = 1% (unless a first time buyer in which case up to £250,000 = 0%)
£250,001 - £500,000 = 3%
£500,001 plus = 4%
From 25th March 2011
Up to £125,000 = 0%
£125,001 - £250,000 = 1% (unless a first time buyer in which case up to £250,000 = 0%)
£250,001 - £500,000 = 3%
£500,001 - £1 million = 4%
£1,000,001 plus = 5%