SDLT and inheritance tax cuts main industry hopes for Autumn statement
Chancellor Jeremy Hunt delivers the Autumn statement next week and agents are on tenterhooks as to what he has in store for the PRS.
Property experts are hoping next week’s Autumn Statement could deliver some Christmas cheer with hopes that changes to stamp duty land tax and inheritance tax amongst others all get a mention.
Chancellor of the Exchequer Jeremy Hunt will deliver his fiscal plans to the House of Commons on November 22 and it is likely to be the last for the Government before the next general election.
FAILED TO GROW
But questions remain over whether he will have much room to manoeuvre. Figures from the Office for National Statistics last week revealed that the UK’s economy failed to grow between July and September.
And although the figures mean the UK dodged a recession this year high inflation remains the main obstacle to growth.
Stamp duty is charged at 5% between £250,001 and £925,000, starts at £425,000 for first-time buyers, and rises to 12% for properties exceeding £1.5million. Meanwhile most people can leave an estate up to the value of £325,000 without paying inheritance tax, which is typically levied at the headline rate of 40%. That nil-rate band has been frozen since April 2009 and would now stand at £489,700 had it risen with inflation.
Richard Davies, Chief Operating Officer, Chestertons, says: “A stamp duty exemption for downsizers would be a crucial step to help those wanting to move to a smaller property.
“A tax exemption would encourage downsizing which in turn frees up large, under-occupied family homes.”
Davies is also hopeful for an extension of the Mortgage Guarantee Scheme.
“With the public facing higher interest rates and the cost of living some aspiring buyers – particularly in the capital – need additional support,” he says.
And he adds: “To bring much needed relief to the lettings market we would like to see the Chancellor reconsider tax incentives for buy-to-let landlords with the aim to boost the number of rental properties.”
While public finance projections from the Office for Budget Responsibility have made grim reading this year but the Chancellor may have more fiscal headroom than was envisaged at the time of the Spring Budget.
CROWD-PLEASING TAX CUTS
Sian Steele, Head of Tax at wealth management and professional services firm Evelyn Partners, says: “If the estimates are correct, the Chancellor still can’t afford a pre-Election bonanza but it could open the door to some targeted yet crowd-pleasing tax cuts.
“Some of the policy speculation floated in the press over the last few months around inheritance tax and stamp duty could have legs.
“The nuclear option of abolishing inheritance tax would certainly grab some headlines but seems more likely as a manifesto promise than a rabbit out of the Autumn Statement hat.”
And she adds: “Stamp duty has been one of a number of fiscal drag cash cows for the Treasury, with receipts growing substantially year on year as UK property prices soared over the long term.
“But it has also come under increasing criticism for congesting some parts of the property market, as a disincentive towards downsizing for older homeowners, and even damaging UK business by restricting labour mobility.”
MORE EXPENSIVE
A dearth of family homes on the market is making it less possible and more expensive for younger buyers looking at in-demand areas to move into larger properties.
Steele says: “Stamp duty reliefs and holidays – such as the raising of the threshold to £500,000 for all buyers during the Covid crisis in 2020/21 – are relatively easily implemented, although they do cause angst for those caught on the wrong side of deadlines.”
But David Hannah, Group Chairman of Cornerstone Tax, says that with the Bank of England holding interest rates at 5.25% the key issue within the property market that needs addressing is affordability.
“A stamp duty holiday is not what is needed to fix Britain’s property market,” he says. “This would be a short-term fix to a long-term issue of affordability. This must be addressed to restore some kind of activity and balance to the market.”
The Neg reported in July how millions of pounds are being overpaid by property buyers due to Stamp Duty mistakes.
