Homes worth more than £2m will face a new stamp duty rate of 7 per cent after a compromise between the Coalition parties to deliver a quicker rise of the personal allowance to £10,000.
Currently stamp duty kicks in at £125,000 and is charged at 1 per cent, rising to 5 per cent on properties worth over £1m. The Chancellor will announce the new rate during this afternoon’s Budget.
The £1.5bn raised from the duty will be used to fund an increase in the personal allowance. The personal allowance is due to rise to £8,105 in April and the Government is set to increase it to £9,205 in April 2013 and then £10,000 a year later.
The rise in stamp duty will mean that the minimum tax on a property worth more than £2m will rise from £100,000 to £140,000. Stamp duty on a property worth £5m will rise from £250,000 to £350,000.