The Chancellor has been urged to scrap Stamp Duty Land Tax in the forthcoming Budget. Separately, a tax specialist has called for an end to landlord bashing.
The Adam Smith Institute says that axing Stamp Duty would help solve the housing crisis and deliver a £10bn boost to the economy.
The think tank said the tax is putting people off moving to new jobs and keeping households living in houses that are too large for their needs.
It said that such is the damage done by Stamp Duty, it is “almost as bad as setting fire to the money instead of raising it in tax”.
Instead, the Institute believes that Philip Hammond should raise Council Tax on the most expensive homes.
Sam Bowman of the Adam Smith Institute said: “Stamp Duty is the worst tax we’ve got.
“It is gumming up the housing market and keeping people trapped in the jobs that aren’t best for them.
“Scrapping it should be a no-brainer.”
Last year, Stamp Duty Land Tax raised a record £11.7bn, up from £10.7bn the year before.
Separately, an accountancy firm is calling for Hammond to make it more attractive for landlords to sell up.
Bishop Fleming’s head of tax Andrew Browne said the Government is taxing landlords out of the rental market through a cap on mortgage tax relief, a 3% Stamp Duty surcharge and the withdrawal of the “wear and tear” allowance. Landlords have also recently seen more stringent mortgage lending criteria introduced.
Browne said: “These recent changes are designed to hit private landlords, but what the Government has not done is to make it easier for those landlords to downsize their portfolios, or leave the sector completely, without incurring massive tax penalties.
“It has been all stick and no carrot from the Chancellor.
“Landlords face a Capital Gains Tax bill of up to 28% on any gains they make on the selling of properties, without any relief for the time a property has been held, or for inflation.
“In the past, any gains would have been tapered depending on the length of ownership, and any increase in value purely through inflation would have been removed with an indexation allowance. Both these reliefs have been removed by successive governments, though indexation relief continues to be available to companies.
“The removal of taper and indexation reliefs has created a punitive retrospective tax on private landlords who may have bought their properties many decades ago. Inflationary pressures are outside the control of landlords, so it is unfair that they should not get some measure of relief from gains that have arisen simply through inflation”
The ONLY problem with stamp duty is the 3% added for anyone who owns more than one property. This was intended to reduce the number of buy to let landlords purchasing ahead of private buyers but the tax changes have sorted that. The extra 3% is stopping many, many ordinary people from moving and really needs to go.
EVERYONE else buying a property under £925,000 is spending no more and most are spending rather less on stamp duty. It is only the exclusive London market that has a problem with the higher rates over £925,000. 99.5% of the marketplace can only dream of paying that sort of price.
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As the London market drives the economy and as there is such a shortage of rental properties in the affordable sector, surely the most logical route would be to incentivise buy to let landlords, so there is ample stock which will keep the rental prices lower. Less stock higher prices, more stock price reductions – it’s simple mathematics that our recent Chancellors seem to have forgotten.
The current levels of SDLT are punitive and holding back the market. The answer is: BUILD MORE HOMES. It’s the same equation as above – more stock etc etc. It’s really not rocket science.
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Quite right Adam Smith! The multi-layers of stamp duty rates has stalled the market in some areas. A lack of mobility and refusal to pay high rates of ‘moving tax’ damages the economy & damages the housing market. Instead of hammering a few buyers paying over £1m, the Chancellor should cut rates across the board and watch the housing market fly (and stamp duty receipts). The current attitude to buyers paying over £1m, foreign buyers, small Landlords and First Time Buyers is about as unConservative as you could imagine. But don’t hold your breath in the upcoming Budget.
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Forget the £1m+ fancy London homes. Let’s put their duty up and reduce it for the 99.5% of the rest – Oh yes – that’s just what they have done. Well done government for getting it right for once.
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Dear Newsboy,
Your sentiment is understandable from an emotional and social level however if you tax the rich, the poor or working classes suffer. As a result of the London market being stalled by this punitive SDLT, the engine of the country has been starved of oil. There are 60+% less transactions and developments meaning less work for builders, painters, plumbers, carpenters, brickies etc. The economy is losing out on the foreign spending who understandably have gone elsewhere. In other words it has been a short sighted attack on the rich who pay the bills and back fired badly on everyone else. You need to see and understand the bigger picture.
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