Changes apparently being considered include raising the threshold at which the tax becomes due, reducing the top rate and switching the liability of the tax from buyer to seller. Welcome news, no doubt, for property professionals and the public at large.
When Stamp Duty was extended to land transactions in the 1950s it was a simple tax that few people paid. The self-assessed ‘SDLT’, as it is now known, was introduced in 2003 because the Government thought the previous incarnation archaic, not suited to e-conveyancing (note where we are with that in 2019) and open to abuse. There have been a number of amendments to the legislation since its introduction. Initially the ‘slab’ system, which distorted market valuations, it is now a ‘slice’ system akin to income tax beginning at 2% for transactions above £125,000 and progressing to 12% above £1,500,000.
“What is for certain is that SDLT now catches a significant proportion of those going through the conveyancing process and it is a lot more complex than its 1950s predecessor.”
By way of example, a given transaction could involve the ‘normal’ residential SDLT rates (above) or it could involve commercial/mixed used rates, the higher rate for companies without business relief, the 3% surcharge for additional dwellings, multiple-dwellings relief or the first-time buyer relief. In addition, Wales and Scotland have their own versions of the tax. Conveyancers are not tax experts and, as one commentator stated, the complexity can be disproportionate to the tax at stake.
George Osborne’s 2014 changes to SDLT have, arguably, achieved their purpose of both halting the price rises at the top of the market and helping more first-time buyers get on the ladder. However, there has been a steady decline in the number of transactions compared to the early 2000s. The Office for National Statistics recently announced that the year ending June 2018 had “the lowest number of sales since June 2013.” This reduction has inevitably led to decreased SDLT revenues.
The market and the legislation both need a shot in the arm – hopefully it will be on the next government’s agenda.