Chancellor Rachel Reeves is reported to be considering a proposal to spread stamp duty payments over several years, as property tax speculation continues to cast a cloud over the housing market. News of the plans come as HMRC’s stamp duty land tax receipts hit £9.33 billion so far this year – almost £1.6 billion more than the same period a year ago.
The plans to spread stamp duty payments were reported by City AM last week, with proposals said to be under discussion and negotiations with OBR analysts due to begin in the coming weeks.
Richard Donnell, executive director at Zoopla, said staggering the payments is ‘a great proposal’ that would boost home moves. ‘Stamp duty is a big cost for many buyers that can put them off purchasing a home’, he pointed out.
“Four in five home owners pay stamp duty, with it also hitting two in five first time buyers. The greatest burden is on those buying in southern England where 60% of all stamp duty is paid. Reducing the barriers to people moving home is important for economic growth and to support more home building.
“The real answer, long term, is to remove stamp duty all together but as a tax that generates over £10bn a year its a tough one to reform.”
In the meantime, continued speculation over reforms to property taxes could lead to ‘unintended consequences’, Coventry Building Society’s Jonathan Stinton warned. The head of intermediary relationships explained:
“Nobody wants to be the last one to pay the old tax. If people think they could save thousands under a new system, or even spread the cost over time, some may choose to hold off buying until there’s more clarity.
“The idea of shifting the burden from buyers to sellers, or allowing staggered payments, would be a significant shake-up, and for many buyers it would remove one of the biggest barriers to owning a home. But speculation can make the housing market hold its breath for a minute while people wait to see what happens.”
As research from Boon Brokers found an overwhelming majority of homebuyers are concerned about rumoured changes and their financial impact, Stinton warned that reforms must be carefully thought through. ‘Passing the tax to sellers could make people at the top of the chain think twice about moving, while staggered repayments could affect how much people can borrow’, he said.
“Reform has to strike the right balance so that it supports buyers, keeps sellers in the market, and helps the housing market keep moving.”
2 responses
So long as she doesn’t expect property lawyers to chase the annual payments and send them on to HMRC.
And fine us for any payments not made on time.
it is your responsibility, pack it in.