As we await the details of the Budget tomorrow, will the Chancellor consider a cut to Stamp Duty Land Tax (SDLT)?
If so, Tim Walford-Fitzgerald, Tax Partner at HW Fisher has outlined everything Jeremy Hunt needs to take into account when considering SDLT cuts saying:
“Cuts to Stamp Duty Land Tax (SDLT), whether targeted or more general, are generally welcome as they act as a disincentive from otherwise understandable property decisions. Older people are less likely to downsize if a proportion of the gain they hope to realise simply vanishes into the Treasury coffers because they are buying a replacement home.
“However, cuts that favour one group over another risk inflating prices in that part of the market, as the reductions can create an increase in demand without correspondingly increasing supply. The expense of moving up the ladder can also be significant, with SDLT often adding at least 5% to purchase costs. Broader cuts to SDLT can avoid these bottlenecks in the market and allow freer movement of properties.
“Paper profits on homes and rising rents may play nicely to certain audiences but maintaining the security of the already affluent has an effect on the wider economy; those without their own homes struggle to respond to the economic demands of increasing housing costs, unable to move to better positions that could benefit the economy as a whole.
“Retailers have long known that time limited price cuts create a temporary bulge in demand but the property market needs longer term intervention. If permanently cutting stamp duty for all results in a more responsive and efficient economy, the resulting long term benefits of increased productivity could outweigh the immediate impact of reduced revenue from that one particular tax.”
