British government unveiled on Wednesday Stamp Duty Land Tax reform which will cut the tax for 98 percent of home buyers and impose higher tax on buyers of luxury houses.

Speaking during his autumn statement at the House of Commons on Wednesday, the Chancellor of Exchequer George Osborne said that from Dec. 4, 2014, the current stamp duty system will be replaced by a graduated rate, working in a similar way to income tax.

Under the new calculation, no tax will be levied on the first 125,000 pounds (196,250 U.S. dollars) of a property, followed by two percent on the portion up to 250,000, five percent up to 925,000 pounds, 10 percent up to 1.5 million pounds and 12 percent on that part that above.

Previously, stamp duty was implemented with different rates of the total purchase price. For instance, stamp duty on property valued between 125,000 pounds and 250,000 pounds is one percent; between 250,000 to 500,000 is three percent, etc.

Osborne said that after the implementation of the new tax system, stamp duty would be cut for 98 percent of home buyers who pay it, in a tax reduction worth 800 million pounds per year.

Andrea Leadsom, Economic Secretary to the Treasury, told Xinhua that under the new tax regime, property valued above 937,500 pounds would be taxed more if it were sold.

And the reason on the immediate effectiveness of the new stamp duty regime is to mitigate the market mess-up, because some of the house buyers might rush to buy properties before the effective day, said Leadsom.

"Reforming Stamp Duty Land Tax from a slab to graduated system is certainly an improvement, and should give a short-term boost to housing transaction," Matthew Pointon, Property Economist at Capital Economics, commented in a note. Endit

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