Accountants have joined the ever-increasing line of agents and politicians calling for changes to Stamp Duty.
The Association of Accounting Technicians (AAT) trade body has written to MPs calling for the controversial property tax to be switched from buyers to sellers.
This has been suggested previously by Simon Gerrard, managing director of Martyn Gerrard, as well as Yorkshire Building Society, but the Treasury is yet to take notice.
The AAT said such as change would increase transactions, maintain receipts for the Treasury and remove the charge for every first-time buyer, making it fairer as home owners are more likely to have the funds compared with those not yet on the property ladder.
The AAT does concede that some sellers may simply add the cost on to the asking price of the property, but said even if this did prove to be the case in some instances, then the buyer will still benefit from a lower upfront cost.
Phil Hall, head of public affairs and policy at the AAT, said: “AAT has long recommended switching Stamp Duty liability from the buyer to the seller which would lead to a Stamp Duty reduction for every house buyer in the country.
“It would also eliminate Stamp Duty for all first-time buyers without having to waste £670m a year on the latest subsidy scheme which came into force for first-time buyers last November.
“Given this would help address the concerns Boris and many others have expressed, whilst simultaneously protecting the £9.3bn of tax receipts that residential Stamp Duty generates, switching liability to the seller seems like a no-brainer.”
It only works on the first property. After that the buyer is a seller and pays it even if they step out of the property market. It is firmly a FTB initiative only and does absolutely nothing to stimulate the overall housing market.
Also, how does the buyer benefit from a lower upfront cost if the seller loads the price to cover the stamp. Doesn’t the buyer end up with a larger mortgage because they are paying more for the property and is now either paying 25 years interest on monies borrowed to cover the higher price, or putting down a larger deposit.
I won’t even go into the impact on the older generation currently accused of home blocking.
Yep, seems like a no-brainer except the most basic understanding of the UK property market shows it to be fundamentally flawed.
I hate delivering problems with solutions but in this case I will make an exception. It’s lazy, ill considered, headline grabbing nonsense that even government won’t listen to so it must be bad if they have seen through it.
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Of course it helps more than the FTB market as buyers are paying stamp duty only on lower price of house sold instead of higher price of house bought.
Older people downsizing can afford to pay more, they usually have lots of equity in their house to do so.
This seems like a much fairer system than we have now.
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“Older people downsizing can afford to pay more, they usually have lots of equity in their house to do so.”
You really do only have two pidgeon holes in your toolbox to work with – don’t you?
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Just remove the tax or only charge on high end prices.
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Yeah, just remove it and lose £10bn in tax that we obviously don’t need for things like the NHS that are doing so well under this Government!
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Actual accountants suggested this?
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Nope – see my post below LaL.
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Actually they are, we use an AAT licensed accountant. They are just as qualified but without the Chartered snobbery.
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NO THEY ARE NOT.
See my post below. But then i suggest you ring ICAEW and ask them to confirm that their Members are no more qualified than those of AAT.
Look forward to you posting their reply.
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Tiresome having to constantly correct you but please see the “ what is an AAT accountant (MAAT)” section here: https://www.aat.org.uk/train-your-staff/professional-status-for-your-staff/chartered-accountancy-status
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It is a sensible solution and one that would ultimately collect more revenue. Most vendors do have sufficient equity in their property to pay the stamp duty. It should also be paid on all transactions irrespective of price and as for the comment the vendor will just put it on the sale price is not valid, in a free market the price is dictated by what someone will pay not what the seller wants. Stamp duty when buying has to be found and on an expensive property having to stump up hundreds of thousand pounds is a big deterrent, this filters down the whole chain. Vendors who are buying and trading up market will be better off, vendors who are cashing out or downsizing can easily afford it. If you want to give FTB’s an advantage over investors you could introduce a clause that if you sell to a FTB you will pay less stamp. If you are a forward looking government you would also see that you have the ability to impose an additional stamp duty for buyers at some point in the future!
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That’s a real solution to the ‘bedroom blocker’ situation isn’t, put off downsizers even more.
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Yeah, not great for downsizers but realistically most of them have equity when downsizing so can afford to pay it, unlike lots of FTB.
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“Accountants have joined the ever-increasing line of agents and politicians calling for changes to Stamp Duty.”
Erm… no they haven’t, Mr Shoffman – Accounting “Technicians” have.
They are not accountants. They are diluties. They do the legwork that Chartered Accountants then make sense(?) of and turn into Accounts.
Like a Solicitor’s Assistant – or a window cleaner’s ladder footer.
Part of the knife but certainly not the sharp end.
Chartered Accountants won’t appreciate your lumping them in with the minions…
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If you don’t like the message shoot the messenger? We have been using an AAT licensed accountant for more than a decade. Just as good as a Chartered but without the snobbery or high fees.
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“We have been using an AAT licensed accountant for more than a decade.”
No you haven’t. You’ve been using a licensed ACCOUNTANCY TECHNICIAN. An AT is not and can not claim to be “an Accountant”. An Accountant has different qualifications and can perform different roles. Neither is a Bookkeeper an Accountant. They all work with figures – end of similarity.
You wourk with property. Does that make you a Bricklayer? Or a Bricklayer an Estate Agent?
Accountants generally justify their charges. I hope their cheap fees aren’t costing you in the long run in terms of what a snobby high fee might get you.
I would suggest that ICAEW would beg to differ with you on your last sentence – but that would be an argument you’d be having with them and not with me.
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Totally wrong but don’t that stop you!
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Feel free to explain your reasoning behind this statement.
Oh – there isn’t any…
…never mind.
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Totally wrong but don’t that stop you!
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Again, tiring having to constantly correct you but please see the “what is an AAT accountant” section here: https://www.aat.org.uk/train-your-staff/professional-status-for-your-staff/chartered-accountancy-status
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“The AAT does concede that some sellers may simply add the cost on to the asking price of the property, but said even if this did prove to be the case in some instances, then the buyer will still benefit from a lower upfront cost.”
…that the buyer then pays interest on for the duration of their mortgage.
Brilliant plan. Bring on the next thrilling instalment, why don’t you!
NOW can you see why these chuffers aren’t the sharp end of the knife…?
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Although I can see that they would end up paying interest over the 30 odd years of the mortgage, it would be one less cost they have to find… Although some vendors would not be able to sell their place due to equity, so there would be a bottleneck there… Who would benefit I wonder? New homes builders by any chance? They will just build that cost in to the cost of the development.
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“it would be one less cost they have to find…”
But one which, CL, would eat into their affordability calculation and therefore the “value” of the property they can purchase.
Then – what about those who port their mortgages from home to home? Adding in the Duty every time… never really repaying any of it and affecting any capital gain – never mind what would happen when prices take a downward turn.
Just another recipe for disaster in the grand cookbook of f***ups, I would suggest.
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That’s true, I hadn’t thought of it that far…
x
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‘x’ right back atcha, CL – and another ‘x’ for good measure!
;o)
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This a good idea. The new FTB scheme confuses customers – we are constantly having to explain to them if duty is going to be payable or not where as this would take all that hassle away.
It’s going to help others to as it will be a smaller amount paid (on house sold not house bought).
Yes, as some have said here, it’s not great for older downsizers but over the last 12 months I can’t think of one downsizing customer who didn’t have a chunk of equity they could use to pay this, I can’t say the same about FTB.
Some might add a bit more on their sale price but they’ll face downward pressure too as the higher the price, the higher the stamp duty they’ll have to pay. We certainly wouldn’t advise any of our customers to whack this on to their sale price, as 40yearveteran08 says, a house is only worth what someone is prepared to pay for it.
Good idea, better than current system, we support it, but need to look at any unintended problems carefully before bringing in.
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“Good idea, better than current system, we support it, but need to look at any unintended problems carefully before bringing in.”
I’m sorry – how can you therefore offer your “support” to something that you clearly accept that there are obvious issues and potential “unintended problems” with?
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Peebee you’re clearly an angry person who when armed with a little info feels they know everything but rarely does. I’m not going to engage in any further debate other than to suggest you consider having a deep breath and a lie down.
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So investment sellers would face an effective hike in taxes to add to CGT. Difficult markets do not embrace vendor “whims”.
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