Mr Osborne's dramatic overhaul of the stamp duty system is designed to counter Labour's popular call for a mansion tax, charged on £2million homes every year
George Osborne today dramatically announced he is scrapping the hated stamp duty 'slab' system which will make it cheaper to buy any home worth less than almost £1million.
From midnight tonight, stamp duty will no longer leap at each thresholds but will rise gradually, with multi-million pound sales costing much more.
The Chancellor unveiled an Autumn Statement which he said was built on an aspiration to work, save and own a home.
He announced tax cuts for small business and low and middle earners while going after banks and multi-nationals who try to avoid paying their share.
But he was forced to admit he is only halfway to meeting his promise to halve the deficit during this Parliament, with £30billion in spending cuts needed by 2017-18.
In a highly-political statement, the Tory Chancellor mocked Labour for creating a 'shambles' with the economy and set out his key dividing lines for the election which is now less than six months away.
He boasted that he had brought Britain back from the brink, telling MPs: 'We set a course to restore stability, get on top of our debts and show Britain was not going to be counted out. Through the storm we have stayed the course.'
The stamp duty overhaul will be welcomed by those struggling to get on to the property ladder, or looking to buy a new home just above one of the old thresholds.
However, he said: The new stamp duty rates will only apply to the part of the property price that falls within that band, so there will no longer be a huge jump in stamp duty, for instance, on a property costing £500,001.
People currently in the process of purchasing a home could choose which regime to operate under, Mr Osborne said.
Under the new rules, no tax will be paid on the first £125,000 of a property, followed by 2% on the portion up to £250,000, 5% on the portion between £250,000 and £925,000, 10% on the next bit up to £1.5 million and 12% on everything over that.
He said someone buying a property at the average family home price of £275,000 would save £4,500, while a £2.1m purchase would carry £18,750 more stamp duty compared with the old system.
In other measures, he said:
A 25% "diverted profits" tax - often called a "Google tax" - would be aimed at multinational companies
Air Passenger Duty for children under-12 would be abolished next year, and under-16s from the following year
Bank profits which can be offset by losses for tax purposes would be limited to 50%
An extra £2bn would be put into health services across the UK
VAT for hospices and air ambulances would be refunded
Fuel duty would be frozen
Investment in businesses, academies, research and culture to create a "northern powerhouse" in England
There would be a review of business rates to help High Street stores take on internet firms
People will be able to pass on their tax-free ISA allowances to spouses when they die
There would be a new £90,000 charge for people who are non-domiciled in the UK for tax purposes but have lived there for 17 of the past 20 years
The higher rate income tax threshold would rise to £42,385 next year
Mr Osborne said the tax cut was worth £800m a year.
Earlier, MPs were told UK growth was set to be 3% this year, higher than Germany, but falling to 2.3% by 2019.
The chancellor said the measures he was announcing in the statement were "not a giveaway", and warned "substantial savings" in public spending were needed.
He said the government had inherited an economy "on the brink" but said the deficit was half what the government had taken on.
Government borrowing is forecast at £91.3bn this year, then £75.9bn, MPs were told. In March the forecast for this year was for borrowing of almost £87bn.
"The deficit is falling this year and every year," Mr Osborne said, although he added that "warning lights are flashing over the global economy".
Labour has said the chancellor had failed to keep his 2010 general election promise to balance the books.
Shadow chancellor Ed Balls said the increase in borrowing was in "black and white, hard evidence", saying the chancellor had questions to answer about living standards, wages and tax receipts.
He said: "People are worse off and the fact is he has failed to balance the books in this parliament".
Only Labour could "balance the books in a fair way", he added.
Culled from BBC
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