Speculation is rife that Brown will increase stamp duty by another 1% to 5% as part of his long-term strategy of harmonising property tax rates across Europe: in France and Germany transfer taxes are typically between 6% and 8%. There are also fears that the tax treatment of leasehold transactions might also be tightened.
But there could be some concessions to sweeten the pill: Brown might raise the level at which stamp duty becomes payable. The lower threshold at which stamp duty first becomes payable at a reduced rate of 1% has stayed at £60,000 for a decade. The RICS points out that house price inflation since then means that it has now effectively become a 'catch-all' tax, because in many areas of the UK it is impossible to find a property worth less than the lower limit.
Equally, the newly-introduced regime of stamp duty exemptions in deprived areas might be extended. Although it is aimed at encouraging investment in deprived residential areas, this could have some unexpected benefits for the commercial market. The former Enterprise Zones like Canary Wharf and Manchester's Salford Quays could find themselves exempt from stamp duty because they are still surrounded by areas of comparative poverty.
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