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Last Updated: Wednesday, 22 March 2006, 15:37 GMT
Stamp duty to start at 125,000
Suburban house
No stamp duty if this costs less than 125,000
The threshold for paying stamp duty on property purchases will rise by 5,000 to 125,000, costing the government 40m in forgone tax this coming year.

The move keeps the lowest rate of stamp duty at 1% - but covering properties worth between 125,000 and 250,000.

Sales worth less than 125,000 will not attract any stamp duty while the higher rate bands of stamp duty are unchanged.

The new threshold will come into force for property sales completed on or after 23 March.

The other rates and thresholds for stamp duty will stay unchanged for the coming financial year.

As well as the 1% band, a 3% tax is levied on properties worth between 250,000 and 500,000, and 4% on those sold for more than 500,000.

Property values

Thanks to rising property values since the mid-1990s, the tax has raised ever-increasing amounts of money for the Treasury.

Figures published last November showed that stamp duty raised 5.5bn in 2004-05.

The revenue beats that raised by duties paid on beer and spirits.

Accusations that stamp duty was imposing an unfair burden by default on ever-increasing numbers of house buyers helped trigger a rise in last year's Budget, when Mr Brown raised the lowest threshold from 60,000 to 120,000.

The latest increase will cost the government a modest amount, although the government's total take from stamp duty is affected not just by the prices paid for properties - but also by how many are sold.

According to the Red Book, which accompanies the Budget, the new measure will cost about 40m in the coming tax year and then 30m in each of the subsequent two years.


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