FEATURE
Spotlight on Stamp Duty T
he SDLT holiday generated by the Stamp Duty Land Tax (Temporary Relief) Act 2020 has been a double-edged sword. No doubt it has boosted the property market when the economy generally has been in COVID hibernation. At the same time, it has created an artificial time limit which has increased the pressure on residential Conveyancers when pressure already existed with working from home, problems with search suppliers being able to meet the demand, and the almost constant drumbeat of pressure and criticism from estate agents. Research reveals that there were approximately 100,000 transactions which were at risk of not completing within the allotted time due to the bottleneck in the conveyancing market. It is estimated that the temporary nil rate band has cost the Treasury £3.2 billion. The original deadline of the 31st March 2021 has of course been extended to the 30th June 2021 courtesy of the Budget 3rd March 2021. Whilst in some quarters the extension is welcome there are a number of criticisms that have been levelled at the Chancellor of the Exchequer including – ■ Replacing one deadline with another whilst appreciating that until or if COVID restrictions are lifted the current bottleneck might continue. ■ A failure to engage with some radical reform of the SDLT regime or even more radically replacing it with a totally new scheme. Ideas include a permanent reduction in SDLT, an exemption for downsizers to stimulate the retirement market and at the same time releasing housing stock into the marketplace.
■ The current SDLT regime does little to stimulate the first-time buyer market as first time buyer relief has historically been ineffective in increasing first time buyer numbers entering the market (see HMRC Evaluating the Impact of SDLT First Time Buyers Relief, HMRC Working Paper 13 (November 2011). ■ The SDLT holiday has distorted property values. ■ More radically SDLT has been criticised as a transaction tax when one of the basic tenets of taxation economics is that transaction taxes should be avoided and that SDLT discourages mutually beneficial transactions. The counter to this is the use of a sales transaction tax shifting the burden from the buyer to the seller as the latter is usually in a better position to pay the tax. The Current Regime Introduced in 2014 stamp duty has become a progressive tax with rate increases applied between specific stamp duty thresholds instead of being applied to the final purchase price of a property. Changes were made to the new stamp duty system in November 2017 when the government introduced first time buyer relief and of course a number of surcharges have been introduced including higher rate surcharges relevant to second properties, and for non-UK residents. Do not forget the availability for multiple dwelling relief if buying 6 or more properties with a buyer able to choose non-residential rates of SDLT (not the higher rates) or higher rates using multiple dwellings relief. Continued on next page
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