Osborne to launch tax grab on expensive homes

LONDON Wed Mar 21, 2012 7:26am GMT

A woman walks past houses on a street in London March 13, 2012. REUTERS/Luke MacGregor

A woman walks past houses on a street in London March 13, 2012.

Credit: Reuters/Luke MacGregor

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LONDON (Reuters) - Chancellor George Osborne is expected to announce in Wednesday's budget a new higher rate of duty on the purchase of expensive property and accelerate corporation tax cuts, government officials said.

Osborne is set to introduce a new 7 percent stamp duty rate on sales of property above 2 million pounds, as the government launches a potential tax grab on the high-end property market.

The highest stamp duty rate is currently 5 percent on sales above 1 million pounds.

The main rate of corporation tax is expected to be cut by 2 pence to 24 pence in April, in an attempt to attract overseas investors to help stimulate growth.

Osborne is also likely to cut the top rate of income tax from 50 pence to 45 pence for high earners from April 2013.

The Conservative-led government has always viewed the tax rate, introduced by the previous Labour government in 2010, as a temporary measure but Osborne opted to keep it until now as abolishing it would have been a politically risky move.

He has faced growing calls from within the Conservative Party to ditch the 50 pence tax on people earning more than 150,000 pounds a year.

He is also expected, however, to raise the income tax threshold by more than previously announced to 9,000 pounds, saving low and middle earners at least 125 pounds a year.

The increase is more than a 1,000 pound boost from the current level.

The decision to increase the tax free allowance will be seen as a success for the Liberal Democrats, who have previously called for the rise.

(Reporting by Stephen Mangan; Editing by Richard Pullin)

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