The hated stamp duty land tax is such a badly designed, universally reviled tax that its amazing no politician has got round to reforming it before.
Chancellor George Osborne has finally sorted out the mess, and is so proud of himself, he made it the final flourish in todays Autumn Statement.
It makes you wonder why he didnt get round to it before.
Osborne claims that 98% of homebuyers will benefit from the overhaul, and hopes they will thank him come the general election next May.
But thats not his only political goal: he is keento twistthe knife into Ed Milibands proposed new mansion tax as well.
Good Politics, Bad Practice
Milibandmay still press ahead with hisplans, on the assumption that there is still plenty of mileage in bashing the rich.
Which there no doubt is.
But even if youthink bashing the rich is a good thing,the mansion tax is a bad way to do it. A more sensible method would be to reform the antiquated council tax system, which lets rich property owners off lightly.
The proposed tax will be charged on properties worth more than 2 million. But properties around this threshold will have to be valued, regularly, byan army of surveyors.
Theres plenty of scope for owners to fiddle the system, say, by dividing expensive homes into flats.
Grannies who have lived in family houses for years will suddenly have to paya hefty tax bill from what may be minimal income. You dont have to be Myleene Klass to work that out.
In fact, the mansion tax is so muddled, it made stamp duty look almost sensible.
Bands On The Run
From midnight, stamp duty will make a lot more sense.
Osborne is finally scrapping the slab nature of the tax, which meant that somebody buying a property for 250,000 would pay 2,500, but the bill would triple to 7,500 if the home cost just 1 more.
This distorted behaviour around each price band. The tax will now only be charged on the proportion of the property that falls over each band, rather than the totalsale price.
Stamp It Out
The new starter stamp duty rate of 2% will kick in at 125,000, but only for the portion of the propertys sale pricethat falls over that threshold.
Buyers will pay 2% on the portion up to 250,000, then 5% up to 925,000, 10% up to 1.5 million, and 12% on everything above that.
Osborne assures us that only those buying houses more than 937,000 will pay more than they did before, so he can also claim to be soaking the rich.
But the wealthy wont be complaining quite soloudly, because unlike the mansion tax, they only pay stamp duty once, rather than every year.
And theyll be cheering if Osbornes political manoeuvring does achieve its ulterior aim of putting the mansion tax to the sword.
Osborne may have reformed stamp duty, but investing in property is still expensive, because HM Revenue & Customs will continue toreap billions of pounds from this tax.
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