Stamp duty — a tax placed on buyers when they purchase a property — is an easy windfall for the UK government.
And actually, there are just 10 places in London that provide 25% of Britain’s overall stamp duty tax contribution.
Despite Britons already paying taxes on their wages, the Treasury receives instant cash from homebuyers again when they go to buy a property.
The following rates are now applied to properties of certain selling prices:
- 0% — Up to £125,000.
- 2% — £125,001 to £250,000.
- 3% — £250,001 to £925,000.
- 10% — £925,001 to £1.5 million.
- 12% — Above £1.5 million.
These rates were made applicable at the end of 2014 when the UK Chancellor George Osborne unveiled one of his biggest Autumn Statement surprises. The new stamp duty tax system meant that the wealthiest homeowners would be stung with a bigger bill while average Britons would save money.
This has resulted in savings for anyone buying a property under £925,000 while the change has boosted tax for those buying homes over £925,000.
For example, for an average family home at £275,000, buyers under the new system would pay £3,750 in stamp duty, compared to £8,250 under the old system — a saving of £4,500.
And penalising the wealthiest homeowners seems to be working. In a mammoth UK housing report with 180 charts, Barclays put together a chart from Britain’s taxman, the HMRC, which shows that the top 10 contributors to stamp duty are boroughs in London.