Stamp Duty threshold

lynneinjapan

Deleted_User wrote: »

Lets be honest he's not going to change a thing as its too much of a cash cow, welcome to Rip-Off Britain where the working man is shafted daily...

I agree that there's no way they're going to just do away with SDLT for purchases under £150K or £300K or whatever - but if they changed to a tiered income-tax-style system then there's no reason the total income would be reduced. It would just be spread more evenly and eliminate the artificial gap where nobody wants to pay just over £250K for a property. If you bought something at £240K then you'd probably be paying more SD than before, but at £260K you'd be paying less.

[Deleted User]

The best idea I have heard is the staggered levels on Stamp Duty, it would be the fairest way I can think off. That way nearly everyone will be paying but not the ridiculous levels wheat people have to pay over 250K...

agrinnall

lynneinjapan wrote: »

Interesting! Stamp duty reform would be nice - not to mention eminently sensible - even if it's just restructuring it so that it's similar to income tax (for example first £100K tax free, 1% on anything over £100K up to £200K, 3% for the next £200K, etc.).

You mean like is planned to happen in Scotland - we're ahead of the game again :T.

http://www.bbc.co.uk/news/uk-scotland-scotland-politics-23034247

thequant

The problem with SDLT is that it was implemented in the worse possible way ever. No matter how you choose to change it, there is either a political or an economic cost.


Let take keeping to current SDLT rates but introducing income tax thresholds at the current bands.


I just paid SDLT of £11,100. Under the income tax style system my bill would have been £4850.


There is no way a chancellor could make a tax giveaway of that size, especially as the largest beneficiaries, would be the rich and those in the south.


So to make it costs neutral, he would either have to increase the rates or the reduce the thresholds, then this would look like tax rate hike even if it didn't cost people a penny more.


One of the reasons NI is not merged income tax is that large parts of the population would think they were being tax more and the party in government would be out of power for a generation.

tigsly

I was pondering such a change

if they did provide grades - so you only pay the additional % for the figures between amounts so EVERYONE gets the first amount free - then the next bit is charged at 1% .. the next bit charged at 2% .. and so on - then there would be a huge gap in the tax bill...

They'd loose loads of money (Unless they increased the % for different properities..)

That said they have 'cut taxes' that didn't need to be - and this would benefit the weatlthy which is right up there street...

So I guess its wait till wed to see..

lynneinjapan

tigsly wrote: »

I was pondering such a change

if they did provide grades - so you only pay the additional % for the figures between amounts so EVERYONE gets the first amount free - then the next bit is charged at 1% .. the next bit charged at 2% .. and so on - then there would be a huge gap in the tax bill...

They'd loose loads of money (Unless they increased the % for different properities..)

That said they have 'cut taxes' that didn't need to be - and this would benefit the weatlthy which is right up there street...

So I guess its wait till wed to see..

They wouldn't need to lose money if they tweaked the percentages and thresholds right.

Here are some examples:

House A £120K - current SDLT £0
--- £125K threshold ---
House B £130K - current SDLT 1% of £130K = £1300
House C £175K - current SDLT 1% of £175K = £1750
House D £240K - current SDLT 1% of £240K = £2400
--- £250K threshold ---
House E £260K - current SDLT 3% of £260K = £7800
House F £350K - current SDLT 3% of £375K = £10500

Move the lower threshold to £80K and make the rate above that 2%, then 4% above £180K, then 6% above £280K

House A now 2% of £40K = £800
House B now 2% of £60K = £1200
House C now 2% of £95K = £1900
House D now 2% of £100K + 4% of £60K = £4400
House E now 2% of £100K + 4% of £80K = £5200
House F now 2% of £100K + 4% of £100K + 6% of £70K = £10200

So there's not much change to SDLT on properties that were previously in the middle of a band (C and F in this example) but the ones at the extremities are smoothed out a lot more so that stamp duty is less of an influencing factor. Very much like the Scottish proposal, except that I've pitched my example more at the sort of prices that normal people are likely to be paying!

I suppose thequant does have a point about it looking like a tax hike though. It would if the property you were interested it was towards the top end of a bracket.

tigsly

Thats scary % to think about if you are buying south..

Alot of properties around here are well over 500K.. and I thought 4% was a high demand - but on yours it would be 6%. .. for the majority of the purchase price..

TrixA

I can't see them making any changes to stamp duty in this budget - they need the revenue, and any reduction would be likely to stimulate additional demand in London and the SE.

I do think stamp duty needs reform though - they could start with smoothing out the thresholds, as LynneinJapan suggests. As a London-based FTB, the tax does seem quite unfair - we'll be paying in the 3% band, yet this will only get us a very modest property in a marginal area. Not to mention the enormous bite it will take out of our deposit. I think it would be fairer if the seller paid the tax rather than the buyer - this might help to restrain prices somewhat.

Chosen1

I found a legal firm (online) that prosmises it can help you reduce the SDLT bill by up to 50%. They claim that this is completely legal and they work with a wide range of estate agents and banks. Does anyone have any experience of this or ever used them before. It sounded too good to be true to me!

Seabee42

There have been a few threads where the Revenue has gone after people who have used such avoidance schemes. The point about house buying is your leaving a register when you buy the house (on the land register) so its easy for them to check against this and against their receipts.