The Chancellor of the Exchequer, Sajid Javid, has backed away from the suggestion that he is considering an overhaul of Stamp Duty regulation, shifting the tax burden from home buyers to sellers, to help people get on to the property ladder.
It was initially believed the Chancellor was hinting at this change during an interview with The Times newspaper when he mentioned he was looking to create a more efficient tax system and didn’t deny he was considering major reforms to Stamp Duty. He commented: “I’m looking at various options. I’m a low-tax guy. I want to see simpler taxes.”
However, the Chancellor later appeared to his approach in a tweet, saying, “To be clear, I never said to The Times I was planning to put it on sellers, and I wouldn’t support that. I know from the Ministry of Housing, Communities and Local Government that we need bold measures on housing – but this isn’t one of them.”
Impact on the market
Buyers currently pay Stamp Duty on properties worth more than £125,000 but this was abolished for first-time buyers on properties worth up to £300,000 in 2017. Removing the burden of Stamp Duty from buyers completely could help those at the bottom of the property ladder, as well as families seeking larger properties. However, it would also put a heavier tax burden on those wishing to downsize.
Organisations such as the Association of Accounting Technicians (AAT) have been campaigning for this kind of change for several years and met Prime Minister Boris Johnson, to discuss the plans earlier this summer. The organisation has also engaged with numerous civil servants, special advisers and politicians from across the political divide on the issue.
After Mr Javid’s initial comments, Phil Hall, head of public affairs and public policy at AAT commented: “The AAT is naturally pleased that the Chancellor has publicly acknowledged he is giving serious consideration to our proposals. AAT does not believe switching Stamp Duty liability is a panacea, but it would be considerably fairer, simpler, more effective and cheaper than the current Stamp Duty regime.”
The Chancellor declined to set out the details of his tax reform plans in his recent interview and said to “wait and see for the budget,” which is due to take place in November.
He added: “It wouldn’t be any surprise that I think taxes should be efficient. We want to set them at a rate where we are trying to maximise revenue, and that doesn’t always mean that you have the highest tax rate possible.”
Based on the Chancellor’s recent comments on social media, any hopes for a significant overhaul of Stamp Duty are purely speculative and major tax reform would require legislation to pass through the House of Commons and the House of Lords, before becoming the law of the land.