Stamp Duty and how former Chancellor Osborne’s reforms are still hurting the housing market

Measures taken by former Chancellor George Osborne are still affecting the housing market almost three years after he left office.

Osborne, 45, who is now editor of the London Evening Standard, was sacked by Theresa May after the referendum in 2016.

After a spell on the backbenches, he stood down as an MP at the 2017 election.

But his policies on Stamp Duty have continued to cast a long shadow, said leading tax barrister Patrick Cannon.

He said: “Forecast receipts from Stamp Duty/property tax for the period 2018-2023 have dropped by £5.9bn.

“This is a significant fall in projected tax revenue and blame must be laid at least in part at George Osborne for his unrealistic expectation that the residential property market would absorb the massive increase in the rates of Stamp Duty that he imposed while Chancellor with rates of up to 15%.

“These enormous tax rises have been self-defeating because they have frozen much of the upper residential sales market and thereby reduced tax revenue due to falling sales numbers.”

https://www.patrickcannon.net/

Meanwhile, to update readers on Stamp Duty Land Tax, Lela Turkia, of Michelmores law firm, has given this briefing:

In the 2015 Autumn Statement, then Chancellor George Osborne announced a number of changes to Stamp Duty Land Tax (SDLT), due to come into play in 2019.

As of March 1, the proposed changes to SDLT filing and payment process time was to be implemented for all buyers in the UK.

A number of other SDLT updates are now also in motion or are to follow pending consultation. For buyers, or those hoping to buy in the future, here is what the 2019 SDLT landscape looks like:

Filing and payment process

Under the current legislation, the deadline to submit a SDLT return and pay any tax due is 30 days from the effective date of transaction.

For the purposes of SDLT the effective date is usually the date of completion or the date of acquisition of an option.

The government has shortened this period from 30 days to 14 days for transactions with an effective date on or after 1 March 2019.

Relief on shared ownership properties

Relief for first-time buyers will now apply to those who are purchasing a property on a shared ownership basis and have elected to pay SDLT in stages.

Provided that the market value of the property is £500,000 or less, first-time buyers of a shared ownership property will not pay SDLT on the first £300,000.

The changes are retrospective and a refund can be claimed on any purchase that was completed on or after November 22, 2017.

Rates on additional dwellings

Higher rates for additional dwellings were introduced from April 1, 2016, for anyone purchasing a property in addition to their main home.

However, buyers were only able to claim a refund for any additional SDLT paid if the intention was to use the second home as a main residence and the former home was sold within 36 months.

In addition, refund applications had to be submitted to the HMRC within three months of the sale of the former main residence. The time period has now been extended and buyers will have 12 months to apply for a SDLT refund after completing the sale of a former main residence.

Higher rates of SDLT for foreign buyers

The Government has also announced proposals to impose an SDLT surcharge for foreign buyers. It is proposed that foreign buyers should pay 1% extra on top of the existing SDLT on second homes and buy-to-let purchases in England and Northern Ireland.

The proposal is to be implemented after consultation, which is due to be published shortly.

www.michelmores.com

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4 Comments

  1. James Wilson

    What a load of absolute tosh. Osborne was very clear when he introduced the changes that this was a tax CUT.  It has turned out to be a tax cut.  And somehow EAs and clingers on like this chap portray it as a bad thing.  Something like 90 per cent of people now pay lower Stamp Duty than before.  The only thing that has “frozen” the upper end of the market it utterly unrealistic prices

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    1. JMK

      There speaks the voice of reason (not).  So what services do you think should be cut to make up for the £5.9bn shortfall in revenue?

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  2. Typhoon

    It’s not tosh if you are the chancellor presiding over falling  revenues from SDLT. The upper end has been no more inflated than other price segments of the market – it’s just the numbers are bigger.

    What’s frozen it, is essentially a rebellion where people just refuse to pay the extortionate rates demanded by Dick Turpin the Chancellor!

    To pay half a million pounds of stamp duty, someone needs to earn  £1m before tax. So if someone earns £1m  and moves in the same year to a property that would attract stamp duty amounting to £500,000 ,”that million earned” would effectively all be consumed in taxes.

    That’s why SDLT revenues have fallen so steeply. If the government had half a brain they could generate twice as much revenue from SDLT by making some modifications.

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  3. Deltic2130

    Good old George Osborne cocking up on tax policy?! Noooo! Never!!!

    Imagine living in an ordinary house in London and wanting to move to a similar house. The value of each might be £1.5m but would still cost £100,000 to move. It’s like the govt are fining you for needing a different location!

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