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Choked off Stamp Duty giving government a headache
It seems the UK government might have another little headache on its hands. And this is one which might benefit us all as pressure continues to build on the power-that-be to reform the moribund Stamp Duty regime.
Stamp Duty is the oldest tax on the British people still in existence. Dating back to the 17thCentury, it is still paid on many property transactions.
The Treasury likes it because it is easy and reliable to collect and brings in a tidy sum in the region of £9 billion a year.
According to research from the Family Building Society and the London School of Economics last year, the regime is clogging up the top end of the house market. Those whose homes are worth £925,000 or better will expect the buyer to come up with another 10 per cent for Stamp Duty – a very considerable sum.
This means, in turn, the so called ‘empty-nesters’ are staying put which contributed to constipation in the housing market still further.
Now, some figures from HM Customs & Revenue have revealed a sharp drop in Stamp Duty receipts from residential property sales in the tax year 2018-2019.
In fact, the near 10 per cent decrease is the biggest at any point in the last decade, falling around £900 million to £8.4 billion. Funny that. Put up a tax on something and people do less of it.
This comes as the Land Registry reports house price growth has fallen to an average of 0.7 per cent, with falls of 2 per cent in the South East and 2.9 per cent in the North East.
Even accounting for some loss of revenue from reforms of the regime for first-time buyers, only a small proportion of the total – this will not come as welcome news to a government and an opposition both with big spending plans.
It would appear then this is further evidence for reform of this ancient tax system. It would seem to be putting a cork in the market at both ends.
And that doesn’t do anyone any good.
Written by Steve McDowell
The content of this blog is Steve McDowell’s personal opinion and comment, and views expressed here are his and unless specifically stated, are not those of Family Building Society. The content on this page is not intended to be advice in any circumstances.