Stamp duty exemption: All icing no cake?
The Telegraph recently reported that stamp duty netted the taxman a record £13bn in 2017, by far the largest take for any calendar year.
Compared to the £11.4bn collected by HM Revenue & Customs, this is a 13% increase on the previous year and a staggering 95% rise on five years ago. The increases have been driven by a series of tax rate rises and a 3% surcharge on second homes.
The government announced the exemption for first-time buyers in November’s Budget. This exemption applies to first-time buyers purchasing a residential property for the first £300,000, for properties up to £500,000. However, this appears to have had little impact, with more tax collected in December than October.
First-time buyers are struggling to take advantage of the exemption, with most unable to find a property priced low enough to meet the £300,000 criteria. Agents are also reporting a downside to the announcement, with many vendors being forced to reduce asking prices to below the £500,000 threshold. This, of course, has a negative effect on sales of properties priced at over £500,000.
High overall levels of stamp duty are blamed for a continuing stagnation in housing transactions. However, given the record revenue earned by the HMRC last year, the government is unlikely to fix the problem.
The Telegraph has campaigned for the abolition of stamp duty in a bid to boost the housing market and help first-time buyers. Conservative MP John Stevenson has also made a proposal of making it a ‘seller’s tax’, not a ‘buyers’ tax’, to help first-time buyers.
The average first-time buyer pays £3,500 in stamp duty, or £10,000 in London, while Yorkshire Building Society estimates that 60% of renters would be helped onto the ladder if the tax was reformed.
Although the exemption was only announced in November and the real results will be measured when the enquires materialise into sales, the initial statistics are not looking very promising.
Disclaimer: While we do all that is possible in terms of ensuring its accuracy, this blog contains general information only. Nothing in these pages constitutes legal advice. You need to consult a suitably qualified lawyer from the firm on any specific legal problem or matter.
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