What if Stamp Duty was abolished?

[Dingledongledell]

I work in an industry that hears lots about tax policy. Stamp Duty is widely regarded to be the UKs most stupid tax. It stops people loving house when their house no longer meets their needs and prevents them from moving areas to take new jobs. It is incredibly economically damaging.

I have a big house as we bought it to accommodate multigenerational living. My MIL is now in a care home and I’d love to downsize. I’d love to live mortgage free, but if we downsized to a property £150k cheaper than our current house any savings would be largely eaten up by stamp duty.

I feel trapped in a big house with a big mortgage. We paid a vast amount of stamp duty to move here not too long ago. We are surrounded by neighbours who have lived in their large houses for many many years. Why should I pay hundreds of thousands in stamp duty over the years just because we move house, when others can sit in vast houses paying nothing more than council tax? It makes no sense to me.

What changes would you make to your current living if stamp duty was abolished?

I appreciate that living in Scotland where stamp duty is far, far higher than in England just exacerbates this problem.

Band A in my small town in Sussex: a tad under £1200.

We get shit services, public transport is piss poor, the library and leisure centre have their opening hours reduced every sodding year, you have to pay through the nose for a resident's parking permit and the grass verges have been left to grow so bloody long that you take your life in your hands pulling out on to the main road.

And I doubt if you'd find many, if any, band A properties. Even a 1-bed ex-LA flat is band B.

Absolutely agree with you. Paying a version of capital gains/sales tax when sell rather than stamp duty when buy makes much more sense. It gets renters into starter homes nore easily, freeing up rentals for others. The housing market starts from bottom up, so if people can't get on the ladder there is less movement further up. DH and I were lucky to get on ladder 20 years ago, we would really struggle to do so now, and I have many hard working friends renting who are saving hard to be able to buy, but the cost of living increases has made this harder to save both deposit and stamp duty.

And if you make gains through the market improving? Many people view their home as an investment and expect it to increase in value - and for many that’s what happens, should they pay CGT on that money too?

I don’t agree sorry. Doing up a home is time and money. It’s different to people who buy a home and sit on it for the growth.

You could tax the normal growth. But then people are taxed on uplift and a comparable house for a move will no longer be affordable. So it’s a stamp duty like tax by stealth really.

For those who buy cheap homes and do them up. That’s a lot of time, effort and money. Why should they be penalised even more for actually contributing to developing our tired housing stock.

There’s a house down the road that I quite fancy downsizing to. The stamp duty would be £12.5k. Given that we’d release equity of more than ten times that it doesn’t even feature as a deterrent. What does put me off is all the hassle of buying and selling and the actual move.

No
As I said in my post.

Just the addition of habitable space.

Cheap homes and do them up because they need maintenance etc isn’t what I’m saying

Adding extra m2 is

They are not being penalised for increasing their floor plates. They are paying cgtax on making money on developing their property.
Developers pay taxes. Capital gains tax is lower than income tax, seems fair to me

like all cgtax calculations costs are not taxed

It may be more sensible than a wealth tax in the sense that it’s easier to administer but if you’re positing that SDLT stifles the market, surely CGT on main residences will do exactly the same?

CGT on homes will also stifle the market. People will sit tight in the hope that an incoming government will backtrack. Removing stamp duty would have to go hand in hand with a wider property tax review. Raising taxes on owning expensive properties rather than transacting on them is the way forward, and in a country where council tax on Buckingham palace is cheaper than a property in Blackpool these seems to be plenty of scope for revision.

That makes even less sense. It’s more expensive atm to extend than the floor space is worth.

And that’s not even what I am talking about. I am talking about mainly young people with energy who buy absolute shitholes, with no central heating, ceiling falling in, broken kitchens leaking bathrooms etc.

All the way down to people who buy something crap and do it up mainly through their own hard work and diy.

Both huge undertakings. Taxing capital gains on these means people won’t even get back what they spent. Let alone any extra for the time and effort taken.

What do we do then? Just knock down houses and start again?

The more I think about it the more I think your right.

Yes it should be scrapped. Make up any shortfall with an immediate increase on council tax if necessary.

It's not just property though - e.g buying shares in UK companies face an 0.5% stamp duty upon purchase...so nobody who has an ISA buys shares in UK companies, and instead buys shares in USA companies which are not subject to Stamp duty - it's the most stupid tax imaginable.

What a ridiculous idea. Lots of people are asset rich, cash poor. So you expect an elderly couple in a one bed flat in London to pay more than a family in a five bed detached up north, just because their flat is of higher value? How can they possibly downsize?
I am already paying 4k for a G band. Biggest rip off ever. We get very little for our money.

it seems this would incentivise moving and would certainly help me and my husband, but again I think this punishes the elderly for staying in one place for so long. What my parents bought their house for, now isn’t even a decent deposit for a small flat!

I act for plenty of purchasers who specifically purchase property via a share purchase rather than purchasing from an individual (ie but the company that owns the property rather than buying the property from an individual) because stamp duty on shares is so much less than SDLT. Maybe for individuals buying shares (even then it’s over £1000 so even if you bought £15,000 you’d be paying £75 in tax), but buying and selling companies is a booming business!

Crap properties with no doors. No floors and pebble dashed ceiling. Yep.
Like me

Thats different a rotting piece of housing stock brought back on the market is a good thing.

A property extended out of range of people’s pockets is another.
Extending property does make money. If £/m/ sale is £4000/£5000 ( my atea atm ) and it costs £2500 /m2 building ( costs atm SEast ) You’re making money
If you do a lot of the work yourself you’re making even more

It is developing.
It’s currently an untaxed income that involves work.

People don’t like the idea because people have being over extending the life out of our housing stock for quite the few years now.
You work and make money
You pay tax.
Just Like everyone else.

Ps
Like everything. If you don’t make money. You don’t pay tax.

People wouldn't move though because they’d lose money
They would stay and die there

There’s no cgtax when you die just IHT
So people will stay in their homes and pay IHT on death. No point moving and paying cgtax on a move then IHT on death
All on your family home
The market would become stunted and families would be waiting it out for a probate property

Taxing a properties rise in value when you’ve done nothing to it other than live in it is not income. It’s inflation

I wonder whether people could be given a choice - no stamp duty to pay but you will have to pay annual property taxes instead as long as you’re a home owner.

It’s crazy to penalise people for selling their home. I would 100% pay a higher annual property tax to cover the loss to the treasury.

SDLT brings in £18b/year, how should the government raise the shortfall if it is abolished?

Where have you found 18bn? Residential transactions fy25 was about 8bn.

Council tax is expected to bring in 50bn in fy26.

You could revamp the bands & raise the upper cap on council tax so that all the very large, high valued properties in london (including buckingham palace) pay more (so that it is no longer regressive, with poorer owners of cheap terraces paying relatively more than wealthy owners of mansions). Could quite easily cover the 8bn. The better off can afford to pay £5k council tax p.a instead of £3k, and I include myself in that.

I'd also replace council tax with a centralised version so that it can be redistributed to poorer areas rather than keeping rich areas rich.

https://www.gov.uk/government/statistics/quarterly-stamp-duty-land-tax-sdlt-statistics/quarterly-stamp-duty-land-tax-sdlt-statistics-commentary#residential-transactions

Edited to add link to some stats.

Oh and honestly? Get rid of separate CGT rates. In plenty of other countries capital gains are just taxed at the same rates as other income. It would actually simplify the tax code to do the same here. You can easily have indexation calculations for inflation - calculators could be put on the hmrc website.

So you expect an elderly couple in a one bed flat in London to pay more than a family in a five bed detached up north, just because their flat is of higher value?

Easy to encourage financial service providers to develop products which provide loans specifically for this purpose against the home equity, repaid from the estate. Also reduces wealth inequality where some people inherit ludicrous amounts due to absurd unearned gains because their parents happened to buy a cheap semi in kilburn in 1978.

I’d rather if people are buying and can’t because of stamp duty costs they pay Hmrc back over a period of time plus their standard default interest rate. Or lower probably as it would be wrong to fine them on a high rate I suppose.

Just another wealth tax and we know they don’t work

Perhaps stop the reduction for single occupancy with the exception of those with kids. That might get people moving out of larger houses if they’re on their own.

But that’s all just another tax and not relevant to stamp duty.
Council tax goes to local councils. Each one raises it on need
Currently the biggest chunk goes to adult social care which is why Labour are looking to change the parameters for mental health ( now I’ve derailed)

We ‘re not communists

You could put in a development fee then. At planning sign off stage. Similar to a community levy.

But capital gains isn’t going to be able to distinguish between added value from fixing what you live in and someone doing an extension. That’s too complicated to administer.