The Chancellor George Osborne is expected to close a loophole on stamp duty in the Budget this Wednesday, 21 March.

Speaking on BBC programme ‘The Andrew Marr Show’ on Sunday, Mr Osborne said he would be “extremely aggressive” in dealing with those who avoid paying stamp duty.

Those who avoid paying the tax would be liable for “punitive charges.” It is thought closing the loophole could raise up to £500m.

Mr Osborne was referring to wealthy people who buy and sell properties through offshore companies as a method of tax avoidance. This means when a property is sold, the buyer purchases the company as a whole.

As the deal is classed as a corporate transaction, as opposed to a property sale, there is no duty stamp duty payable.

The most popular offshore location was the Isle of Man where over 23,000 properties have been registered.

Stamp duty is payable at one per cent for properties over £125,000 then goes up to five per cent on properties over £1m.

There is also the possibility Mr Osborne will adopt a General Anti-Abuse Rule (GAAR) which means companies have to disclose their tax arrangements in advance and certain tax schemes could be shut down.

The Treasury recently closed a loophole retrospectively, a decision which cost Barclays more than £100m.

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