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Stamp Duty Land Tax Holiday Extension to be debated Monday

Stamp Duty Land Tax Holiday Extension to be debated Monday

Petition

Parliament will on Monday debate the petition, signed by 130,000 people,
calling for the Chancellor’s Stamp Duty holiday to be extended for a further 6
months beyond the current 31st March deadline.

The petition, whose signatories were unsurprisingly concentrated in
southern and more conservative constituencies such as Mid Bedfordshire and
Spelthorne, was created by a Mr Jonathan Steel. He was concerned that the new
build house he was planning to move into at the beginning of March would suffer
construction delays. According to his petition, should the delays put him on
the wrong side of the tax holiday deadline, he would not be able to afford the
additional tax and therefore his house.

Government Support

On 10 December HM Government responded stating “The SDLT holiday was
designed to be a temporary relief to stimulate market activity and support jobs
that rely on the property market. The Government does not plan to extend this
temporary relief.”

Whilst this would appear to put the prospects of an extension near zero,
sources in government have given some indications to the contrary. Jesse Norman
MP, a junior minister within the Exchequer, has asked civil servants to
investigate the implications of scrapping SDLT (Stamp Duty Land Tax) in its
entirety. This news - combined with recent reporting from the notoriously well
connected Tim Shipman which suggests the Chancellor himself is considering the
merits of an extension to the tax holiday - bodes well for anyone still waiting
on local authorities, solicitors or builders to complete on their new home.

Given the success of the scheme, you can hardly blame the Chancellor and
his colleagues for giving an extension serious thought. The COVID-19 pandemic
and subsequent lockdown caused uncertainty for those buying and selling
residential property and property transactions fell by as much as 50 per cent
during the first national lockdown. Since the relief was introduced,
transactions have increased and seasonally adjusted data shows that in October
2020, transactions were 8% higher than October 2019.

A Replacement Tax?

This new mood in government is not all good news for taxpayers. The
upcoming budget, due to be announced 3rd March, will likely
focus on the Coronavirus pandemic, however in the long term there is an
appetite within government for the creation of a new property tax. This would
be aimed at raising more revenue (to help pay the Covid bill), and would likely
take the form of a progressive tax levied against the existing value of homes.
Whilst readers, particularly those with London property, will have their own
views on such a tax, there are other attractions for ministers – including the
prospect of using this tax to replace the current council tax system with
something more streamlined.

In any case, the short term implications of Westminster politics seem
good for prospective buyers. It remains to see what the future holds, however
one thing remains true: so long as SDLT exists in its current form it serves to
artificially inflate the cost of moving home, thereby reducing factor mobility
and stifling the dynamic national economy. Politicians on both sides will have
to consider if this is worth the £11.6Bn it brought in last year.

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