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.

Not really @Nchangeo

The only current problem is that not all extensions need planning. They can use permitted developement.
They do need building regs though and can’t sell without approved building regs

If before works are allowed to start planners are provided with a simple form. ie Existing property size and proposed property size for the developement then HmRC can put an alert on Landregistry
( they already do this when you buy a second property to make sure they get their cgtax when you sell these days that second property tax introduction wasn’t just for the extra stamp duty ).

So as soon as a house sells HMRC get an alert via LRegistry

If you haven’t declared to your conveyancer you’ve extended HMRC will catch you anyway via the alert.

In terms of how much the uplift is due to the developement a simple £/m2 on sale could be used then deduct build cost

So Existing size 200m2
New size 300m2

Sold price £600,000 ie £200,000 for the extension as it’s 1/3rd of the property
Build cost £180,000
So the profit is £20,000 and due tax
If its declared at the point of sale it gets paid just like stamp duty and conveyancer fees.
If not you get caught by HMRC pay the tax owing plus a fine and their standard interest rate on the bill ( currently 17% ) as it would be classed as fraud

That’s ridiculous tbh. The build costs of an extension are not as simple as just saying x. How are you going to evidence all this.

It’s simpler to say permitted development now requires a form. Its surcharge is x per sqm payable to receive your permit.

Yes you could charge like that but it doesn’t reflect capital gains
That’s much the same as pricing a planning application.

It’s not actually that difficult. HMRC do this type of calc for cgtax already so there’s no change required . You simply provide evidence of build costs.
For cgtax it’s all done online and you pay straight away.

Why should I pay more council tax when I’ve already paid so much in SD? My CT is already 11% of my wage…

Because council tax pays for local services provided by your council and stamp duty goes to the Treasury. If we moved the stamp duty would be equivalent to roughly three years council tax.

What if stamp duty was only for buying a bigger house, not for downsizing?

That would be grossly unfair. Downsizing usually releases equity so these people are in a better position to pay it. It would also feed intergenerational resentment.

What is the normal stamp duty rate in Scotland? I didn’t know it was different from the rest of the U.K.

Without highlighting any particular poster, why tax the purchase of a house? Why would that be a sensible thing to do?

Far higher than the rest of the UK, just like income tax. Sigh!

For the same reason any tax is levied - to raise the money that pays for public services. Tax is payable on almost everything we buy in the form of VAT at 20%, why would houses be any different?

There are several different levels just to make it fun... You can calculate by popping in the property value in this link https://revenue.scot/calculate-tax/calculate-property-transactions, so while a £500k home attracts a stamp duty of £15000 in Scotland it will be £23350. The Scottish government have the ability to set their own tax rates across various sources. (Income tax is also at different rates to England - https://www.mygov.scot/scottish-income-tax/current-income-tax-rates )

Today’s news
Reeves looking at tightening ways in which people pass on money and assets to family

What’s that got to do with stamp duty?

Because people can’t afford 20% tax on a house purchase.
Hence the tax is lower.

People have brought up council tax to raise money.So why not something actually in the news today about tax changes

I know. And based on the 0.5% that someone suggested above, how will councils in cheaper areas fund their services, which cost broadly the same across the country to provide. London councils would have lots of money due to property prices being higher. More deprived areas, which may need a higher level of social care etc services, wouod have much less money.

Same, we are paying nearly 4k council tax for a 3 bed house 20 miles outside London, we paid about half that when living in a 3 bed house in London.

Sorry makes zero sense, how can they not afford to move. Im sure they made enough in equity to pay the taxes. Why the burden yet again should be shifted onto younger generation? We’re already funding their retirement bills by paying 10 times more for the properties they’ve purchased 20 years ago.

If you read back to @FunnyOrca post re her aunt with mobility issues in a second fl flat but can’t afford to move to a ground floor one
It matters little if she bought the flat 70 years ago or yesterday. She still needs a ground floor one and can’t afford the stamp. That’s what the poster you tagged was referring to.

You are not funding anyone’s retirement bills by paying more to buy a property. You buying a property has nothing to do with pensions …… obviously !!

Some statistics across the country on your claim properties have increased in price 10 times in 20 years would be interesting to see.

because you do know that’s absolutely !!!!!! not the case. I’d love to know where you read that though

Yes, thank you. It doesn’t matter how much her current flat has appreciated in value as she would need the full sum for a new flat plus the stamp duty and at this point in life it seems a waste when she may soon have to start paying for care.

And people like us that have put hours of hard work into renovating a property wpuld then be penalised for making money on selling it.

The problem is stamp duty, inheritance tax etc all take from the hard working.

To stifle success being rewarded again?

Exactly
it was obvious what you were saying and an issue facing many people.

Of note @CeciliaMars

they already exclude less expensive properties and have stamp tax thresholds.

Increasing in %