Britain is cutting a controversial tax on property purchases, removing a longstanding grievance from homebuyers five months before an election.
The cut in stamp duty, which takes effect at midnight Wednesday (Thursday morning in Hong Kong), will benefit a majority of homebuyers, according to Reuters.
British Finance Minister George Osborne announced the plan during his half-yearly update on Britain’s finances.
While most homebuyers will pay less tax, those buying houses at the top end of the market will pay more.
The increase for the most wealthy could help neutralise the challenge from the opposition Labor party, which is leading the Conservative government in opinion polls.
The Labor party has promised to introduce a “mansion tax” on properties worth more than 2 million pounds (US$3.1 million).
With house prices rising nearly 10 percent in the past year, and twice that in London, housing has become a key battleground in the election due next May with many homebuyers being pushed into higher tax bands.
“Ninety-eight percent [of people] pay less and the whole reform represents a tax cut of 800 million pounds per year,” Osborne said.
Stamp duty was previously levied according to the total value of a home or land at a rate that increased in stages, resulting in big jumps in the tax paid when a property moved over each threshold.
Under the new plan, the tax rate would be graduated and apply only to the part of the property price that falls within that band.
The rates of tax would also change.
The tax will start at 2 percent on the portion of a property from 125,000 pounds to 250,000 pounds, 5 percent from 250,001 to 925,000 pounds, then 10 percent up to 1.5 million and 12 percent above that level.
The 12 percent rate compares to the previous top level of 7 percent for homes over 2 million pounds, meaning that buyers of the most expensive properties in Britain, those costing over 937,000 pounds, will now pay more.
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