A Government-led increase in Stamp Duty Land Tax (SDLT) has raised concerns among advisors at the Institute for Fiscal Studies (IFS), who claim that the measures donít have certain results and may encourage further tax avoidance.
At the end of March, the Government increased the percentage SDLT for the most expensive properties. In 2011-2012 buyers of properties over £1 million were required to fork out 5% of the cost on SDLT. From March 22nd this increased to 7% for those over £2 million (or in some specific cases a whopping 15%). This is expected to have the greatest impact on property in London and the South East.
In real terms this means if youíre buying a property worth £2 million then you will have to pay an additional £40,000 in SDLT making the total amount £140,000. As the IFS points out, this increase is truly a reason to keep costs under £2 million where possible.
The Government predicts that this will affect around 3,000 transactions every year and could raise £150 million once behavioural responses like holding off on buying or purchasing a cheaper property are considered. However, as experts point out, the effects may be dampened this year after the wealthy rushed to seal property deals before the new rates were enforced.