The government has been urged by one of the leading British economic think tanks to halve Stamp Duty Land Tax (SDLT) as part of its efforts to boost economic growth.
SDLT currently stands at 5% between £250,001 and £925,001 before rising to 10% between £925,001 and £1.5 million and 12% on anything above £1.5 million.
The Resolution Foundation said ministers should cut the tax as well as cancelling the planned rise in stamp duty in 2025 at a total cost of £5 billion. This, they say, would make it cheaper to move home and by extension easier to move jobs:
“Stamp Duty Land Tax […] is a bad tax,” wrote the foundation in its report, Tax Planning: How to match higher taxes with better taxes. “By making it more expensive to move, it results in a sub-optimal allocation of housing, and subsequently also affects the labour market by reducing workers’ effective options.”
It’s suggested a similar benefit would be felt by businesses who would be able to switch premises more cheaply.
The Resolution Foundation proposes to pay for the change by making companies pay VAT at £30,000 rather than £85,000, something they say would remove a disincentive for small firms to grow.
The most recent changes to SDLT came as part of Kwasi Kwarteng’s mini-budget in September, where the SDLT-free threshold was doubled. Jeremy Hunt then pledged in November to reverse the cut after 31st March 2025.
How conveyancers will react to the suggestion put forward by the Resolution Foundation remains to be seen, although the absence of any “cliff-edge” – such as that seen during the SDLT holiday – will be welcomed.
As of Wednesday afternoon, a snap poll conducted by The Times found 66% of its readers would support a further stamp duty cut.
3 responses
SDLT is indeed a bad tax. We need a better more permanent solution. I really don’t want to see changes to this being made every year or two, it does not help Conveyancers and does not help the market with the constant flip-flop. One permanent change I would make is to withdraw the higher rate. That is preventing landlords from becoming involved in the housing market; limiting the buyers available and stopping more rentals from becoming available thus increasing rent. The Government also needs to look at early repayment charges. Limit them to 1% of the outstanding balance; that will certainly save clients cash in moving.
Totally agree Andrew – the Government needs to remove the higher rate so that landlords can buy – rental is scarce and is impossible (£1850 per month for a former 3 bed mundane council house where I live) particularly in the south east and London where people on very good salaries cannot afford to rent and save for a deposit on a house. It would bring a whole market back to the table and stimulate the housing market so that equity is not eradicated from the economy as the cost of living crisis takes effect.
SDLT is a tax without justification, it doesn’t as far as I know get earmarked for housing development for example, and I cannot see the justification for it.
But if they do half it they cannot have a Cliff edge cut off point because the panic that entails is untold amd whilst it stimulates the whole market it’s temporary.
SDLT is just a tax on mobility for working middle class families. just remove threshold on properties less than 1.5m