Stamp duty and George Osborne's Budget

song_of_calliope

I've seen some speculation in various places (BBC News, Telegraph opinion pieces) that there may be something about stamp duty reform in the budget that will be announced next week. In particular, some are saying that stamp duty could be changed so that it's staggered. So if you buy a house for, say, £300,000 you don't pay any stamp duty of the first £125k, then you pay 1% on the next £125k, and 3% on the remaining £50k. So in this example only £1750 would be due to the taxman instead of £9000. Fingers crossed.

Does anyone know, if such a thing does get announced, exactly when it would come into effect? Is it immediate? Anyone care to speculate on whether this is likely? I know no one knows for sure.

I ask because we're in the process of buying a house and are likely to exchange in early June. Thanks.

thequant

song_of_calliope wrote: »

I've seen some speculation in various places (BBC News, Telegraph opinion pieces) that there may be something about stamp duty reform in the budget that will be announced next week. In particular, some are saying that stamp duty could be changed so that it's staggered. So if you buy a house for, say, £300,000 you don't pay any stamp duty of the first £125k, then you pay 1% on the next £125k, and 3% on the remaining £50k. So in this example only £1750 would be due to the taxman instead of £9000. Fingers crossed.

Does anyone know, if such a thing does get announced, exactly when it would come into effect? Is it immediate? Anyone care to speculate on whether this is likely? I know no one knows for sure.

I ask because we're in the process of buying a house and are likely to exchange in early June. Thanks.

I'm expecting them to do something with Stamp duty as well, it long overdue reform as the recent price rises in London have started to make this issue critical.


The usual process for budget reforms is for them to kick in year later at the next budget, especially those which involve tax reforms.


The reason being is that the government, businesses & people need to adjust to the new rules which is not possible overnight.


There is also the fact that say with tax thresholds and taxes that are accounted on a yearly basis then changing them lart way through the year creates an accountancy nightmare.


I can't see this being a problem with SDLT as it's a one off tax, however the government will set themselves some time which will include some leeway with the new regime in place. Once everything in place it wouldn't surprise that with HTB that they bring it forward at some point.

ConfusedofYorkshire

No one knows. It'd be most likely to come in at the start of a tax year. So 1st of April. They could do it for this year, so basically immediately or could say not until 2015, just before the election.

But who knows! Normally more stuff seems to be leaked prior to the budget but it doesn't seem to be happening.

System

When the stamp duty increased from £60k to £100k was announced in 2005 Budget, it was from midnight. Me and my ex were four weeks away from moving into our flat which we bought for £81k - in West Yorkshire. We thought it would be from the autumn.

Saved £810 and when we got our internet connection up, we got a holiday and spending money with that money.

kingstreet

Right now the housing market needs no new stimulation, so I'd be surprised if anything is implemented immediately.

He may announce a timetable for the alteration of SDLT to make it "fairer," as a potential vote-winner without actually doing anything now.

da_rule

There were also rumours that the lower threshold would be increased to £250,000 or that the exemption for first time buyers would come back.

song_of_calliope

I suppose if he does announce anything then the timing will have to be very carefully thought out. If he says that some attractive form of stamp duty reform will come into effect on, say, 1 Jan 2015 then perhaps a load of people will decide to pull out of purchases already agreed in order to wait until next year to buy if the savings are significant enough. This could mean the housing market recovery would come to a screeching halt.

If any changes come into effect immediately, the already fast moving market might be spurred on to go even faster with house prices spiraling even further out of reach. Not sure which one the politicians would prefer at this point.

djlevackio

If a significant change were announced I'd expect it to kick in pretty quickly. If, say, the thresholds were changed but delayed until April 2015 then the property market would be chaotic between the budget and then.

There is no reason why SDLT charges can't be recalculated overnight, or even back-dated (although this I think highly unlikely)

Anyone remember what happened when the holiday for FTB was announced a few years back? Did that kick in immediately?

thequant

song_of_calliope wrote: »

I suppose if he does announce anything then the timing will have to be very carefully thought out. If he says that some attractive form of stamp duty reform will come into effect on, say, 1 Jan 2015 then perhaps a load of people will decide to pull out of purchases already agreed in order to wait until next year to buy if the savings are significant enough. This could mean the housing market recovery would come to a screeching halt.

If any changes come into effect immediately, the already fast moving market might be spurred on to go even faster with house prices spiraling even further out of reach. Not sure which one the politicians would prefer at this point.

Spot on, either way any changes will have an immediate and significant effect on the market.


One suggestion I've seen which might work is transferring the burden from the buyer to the seller. Any current transactions going through it will have a neutral effect if buyer and seller agree to the transfer the burden at no net loss to either party.


Although If I was a politician I would bring in the SDLT reforms and deliberately timetable it to slow the market down initially, safe in the knowledge there will be a big boost before the next election when it kicks in.

MentalMinnie

If changes to stamp duty were made, how would affect those that have already started the buying process? We're about half way through buying our first house. If there is a reduction, would we be able to benefit?

MentalMinnie

Actually, no one can really answer that can they?! :rotfl: