Dan Neidle of Tax Policy Associates has posted this helpful chart showing who would benefit the most from abolition of SDLT and, of course, it’s the wealthy.
He is pro abolition but says SDLT needs to be replaced with something else.
taxpolicy.org.uk/2024/06/09/stamp_duty_terrible_how_to_abolish/
Neidle suggests that council tax needs to be fixed at the same time not least the current rule that the top band H is capped at twice the band D rate.
See the second chart which plots property value against effective rate of council tax. Again, it’s the wealthy who benefit. As he says, in a sane world, this curve would either be reasonably straight (with council tax a consistent % of the value of the property), or it would curve upwards (i.e. a progressive tax with the % increasing as the value increases). This curve is the wrong way up.
Lets see what Reeves does next month.
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abolishing stamp duty,would many of us on here benifit?
(42 Posts)Yes it would make a difference to a decision to have that one final move or not I think. But Ms. Badenoch is leaving in a dream world if she thinks she can do that.
The price of houses rises and falls to meet demand.
As a first time house buyer in 1968, most Building Societies lent on the basis of one income only, although we found one who would take into account half my income.
Now when everyone works and Lenders take into account the full income of all adults in the borrowers household, prices have rocketted, single people are disadvantaged and, singles apart, no one else is in any better position when buying their first home then they were bck in the days when Building Societies would only lend on one income.
As was discussed on another thread, previous stamp duty temporary “holidays” have had the effect of increasing prices overall. The tax saved is just added to the sale price. They also create sales spikes which can create a slow down of the market afterwards - as we are seeing now after the last “holiday” ended.
As Guardian policy editor Kiran Stacey pointed out on Newsnight, such a policy would have to be effected immediately if and when Tories came to power (a very big if) as the market would gum up beforehand as people waited for the promised change.
We know the next election has to be called by August 2029. On the back of this promise, people would sit tight. There are usually around 90,000 transactions a month. That’s a lot of gum in the works.
Let’s say the Tories are elected and make their first Autumn Statement in November 2029 announcing the abolition of SDLT from 6 April 2030. Potentially what you could have is hundreds of thousands of households who have sat tight, looking for something to buy and complete the transaction after that date. It becomes a sellers market, prices would rocket and probably wipe out any tax saving.
Say this were to happen now. The average UK house price is currently £270,000 attracting SDLT of £3,500 (and nothing for a first time buyer). £3,500 would soon be wiped out in a sellers market. For someone buying a house for £500,000 the SLDT would be £15,000 also easily wiped in a seller’s market.
The people who will benefit most from this are sellers of expensive properties.
For abolition of SDLT to work for the benefit of buyers, it needs the supply side to be addressed and that means building more houses.
This is projected to leave a rather large hole in government finances that would have to filled from somewhere - probably welfare cuts.
SLDT is an unpopular tax but then all taxes are. Reeves is said to be looking at it anyway but I fear any changes will result in tax rises across the board. SDLT currently raises about £12-14 billion a year. A Land Value Tax has been mooted but it would be a huge and controversial tax to implement. How do you value the land a building sits on? Council tax valuations were random. So would be a LVT.
If Reeves were to introduce a tax on the seller, it would have the same effect. The seller would raise their price to compensate.
All this would cause more inflation. Wage demands would increase. The RPI would increase.. What do governments do to address inflation? Cut spending and/or raise taxes - which affects everyone. We would soon be hearing even more about the unsustainability of the triple lock.
This is just a bribe for the few remaining Tory faithful and would cost us all in the end.
infoman
another statement,that will be forgotten by the time it might come to fruition.
How many of us don't want to move to a new home?
Four years before the next election,then another five years before it might be implement.
Concentrate on the NHS,where we can get doctors appointments within two days and operations with a few weeks.
This would be a benefit to our children and grandchildren surely?
Too late for us. We downsized earlier this year
As it's tapered so the super expensive homes pay more it seems to be the one tax that is actually favourable to less affluent people!
Maybe she needs more Tory donors...
RosieandherMaw
I don’t know.
Many people in our age group are contemplating downsizing and what about the potential benefits to our children and grandchildren who are trying to get on the ‘property ladder”
It’s not all about us.
I have bought four different houses in my life and never paid stamp duty.
Two have been terraced houses, one a semi and one a detached.
This is also being discussed on another thread and no, I don't live in the south east!
I don’t know.
Many people in our age group are contemplating downsizing and what about the potential benefits to our children and grandchildren who are trying to get on the ‘property ladder”
It’s not all about us.
We'll be moving in 4/5 years but it won't be dependent on who gets into power at the next election. I very much doubt we'll see stamp duty removed unless it's replaced with a different tax that might be more punitive. Currently it's an uneven tax because house prices vary so much with geographical location.
As it stands, stamp duty brings in almost £12b into the Government's coffers. If the Tories win the next GE, if Kemi Badenoch becomes PM and if she remembers this promise she won't be able to give this amount of money away. Something will be taking its place.
Like Farage, very easy to stand up and make promises when you don't have to put your money where your mouth is.
It sounds like they are going to change to the seller being charged a tax when they sell, rather than a tax on the buyer.
More likely there will be tax on both, neither of which affect me because I’ve never sold a house, I still live in the place I built 50 + yrs ago and won’t be selling now.
It cost me 10K in stamp duty recently I’d of loved not to pay that but it’ll never happen.
I benefitted from the freeze on stamp duty during covid and without that I would not be in this lovely house.
If stamp duty is to be abolished, a different form of govt income would have to take its place. Stamp duty must bring in a lot of money to the Treasury
Well, it won't happen. We all know where politicians promises end up: stone dead in the water.
another statement,that will be forgotten by the time it might come to fruition.
How many of us don't want to move to a new home?
Four years before the next election,then another five years before it might be implement.
Concentrate on the NHS,where we can get doctors appointments within two days and operations with a few weeks.
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