A Slab of Christmas Cake
Tony Jamieson of Clarke Gammon Wellers takes a look at the agreeable change in stamp duty brought about in the Autumn Statement.
Few people like taxation. Most understand that we have to have taxes. But when they are as unfair as our stamp duty was then taxation seems to be doubly disagreeable.
In his Autumn Statement the Chancellor, George Osbourne, at a stroke righted many wrongs concerning stamp duty - and perhaps put a serious dent in the opposition's mansion tax plans at the same time.
This is too late for millions of buyers under the old system, but a wonderful Christmas present for thousands who are in the process of buying a property at the moment. And it is a massive windfall for buyers next year and beyond. A huge 98 per cent of home buyers will benefit from the Chancellor doing away with the slab system, where buyers would be charged the allotted percentage on the whole purchase price even if it was only £1 over the various thresholds. Now buyers will only be charged tax on a slice of the purchase price.
So great news for the many. But not such good news for the few. Those buying at higher levels - over £925,000 - will pay more for the privilege.
The old stamp duty was a bad tax - or rather it increasingly became a bad tax. As property prices rose more and more people were dragged into the net. Buying a home is expensive enough without the government of the day cashing in on what was seen to be a purely opportunistic raid on people's pockets. Good riddance to it.
What will the knock-on effect be - apart from home buyers having more money to help with a deposit or all those extra expenses connected to property purchase? The new stamp duty rates will not raise the same concerns pundits and commentators had over Labour's proposed mansion tax which would have hit owners of expensive homes every year. That really was threatening the value of their houses. The new stamp duty does not seem so reckless in this respect. Nor will there have to be a mass re-evaluation of property for tax purposes. At the lower end of the market it could add fresh impetus to what is generally seen as a cooling market. But any forecast in this respect should also take into account the negative effect any future interest rate increases may have on the market.
So good news for the market below £1,000,000 and even those in the upper sector should feel pleased that the threat of a mansion tax is perhaps a step further away now than it was on Wednesday.