Osborne reveals British stamp duty overhaul

Chancellor of the Exchequer George Osborne announced a higher forecast for government borrowing as he overhauled the tax on buying homes and increased levies on multinational companies and banks.

Britain will borrow £91.3 billion (HK$1.1 trillion) in the current fiscal year, Osborne said in his end-of-year update to Parliament yesterday, citing estimates from the Office for Budget Responsibility.

The office forecast in March that borrowing would be £86.4 billion after accounting changes that took effect three months ago.

"Today we do not shy away from the problems that remain unresolved in the British economy - while the deficit is falling, it remains too high," Osborne said. "Britain faces a choice. Do we squander the economic security we have gained, go back to the disastrous decisions on spending and borrowing and welfare that got us into this mess, or do we finish the job - and go on building the secure economy that works for everyone?"

Five months before the next general election, Osborne sought to use his autumn statement to persuade voters his Conservative Party is better placed than the Labour opposition to maintain Britain's recovery.

The system of stamp duty on home purchases would be changed today to benefit 98 per cent of buyers, Osborne said.

A new 25 per cent tax will be imposed on profits of multinational companies generated in Britain, while the amount of bank profits that can be offset by losses during the financial crisis will be cut to 50 per cent.

"Some of the largest companies in the world, including those in the tech sector, use elaborate structures to avoid paying taxes - that's not fair to other British firms, it's not fair to the British people either," Osborne said. "My message is consistent and clear: low taxes, but taxes that will be paid."

The tax on multinational profits artificially shifted out of the country would raise £1 billion and banks would pay £4 billion more in tax over the next five years, Osborne said.

The chancellor announced an overhaul of stamp duty on property purchases, introducing marginal rates that will only apply to the portion of the price above a series of thresholds.

There will be no tax on the first £125,000 paid, 2 per cent up to £250,000, 5 per cent up to £925,000, 10 per cent up to £1.5 million and 12 per cent on everything paid over £1.5 million.