Is it time for Stamp Duty Reform?

/ Government, Stamp Duty, Tax

Author: Joshua Ejdelbaum

Tags: Tax, The Budget

On Wednesday, the Chancellor announced that he was introducing a stamp duty holiday to try and provide stimulus to the UK property market. He raised the threshold at which stamp duty applies from £125,000 to £500,000.

This means that, for a property purchase of £500,000, the buyer would save £15,000 in stamp duty. On a property worth £248,000, which is the national average, they would save almost £2,500.

The move has attracted some celebration and some criticism.

On one hand it is argued that this will save purchasers money, and bring forward or encourage purchases which will result in giving the property market a much-needed boost. If you are buying a property yourself, you are likely to be pleased with the announcement.

But there has been some criticism about the measure. Firstly, there are those who say that it is aimed at the wealthy or the expensive markets only. Green MP Caroline Lucas tweeted that it seemed like a “gesture targeted at London and SE housing market. Average prices elsewhere are under £300k. How is this levelling up UK?”  There is also some evidence to suggest that in some cases prices rise so that the buyer does not benefit, but rather the seller.

Which got us thinking… what if there was an alternative way?

New Zealand and Canada, for example do not have stamp duty. Sweden simply has a flat rate of stamp duty for all properties (though a higher rate for companies).

Either of those will definitely be simpler – but would they be better? (and how you define better when it comes to taxation is a whole other discussion in itself!)

Speak to your local accountant for more information.