A British Property Federation blog has proposed three unique suggestions for stamp duty as the parliament works out the kinks in how to fulfill its promise to reform the tax.
The blog starts from the premise that SDLT is currently leading to market mayhem, with a by-product being that homes “designed … with love and attention” are now becoming something akin to Dr Frankenstein’s Monster as they have extensions and large scale refurbishments undertaken as their owners try to avoid moving costs.
So the blog suggests three very radical alternatives:
1. Net Stamp Duty: SDLT would only be charged on the difference between current value of property and new value of property. “It would encourage liquidity. It would free up more cash at the point of purchase for improvements and refurbishments. It would allow the workforce to be more flexible and switch between locations. No SDLT would be payable on people downsizing” suggests the article.
2. Allow Stamp Duty to be paid over time: “It could be linked to tax codes, and so included in PAYE and therefore would not need a separate collection mechanism to be monitored. SDLT paid, however, is not an issue for the majority of buyers as the SDLT can be rolled up as part of a mortgage, providing there is sufficient equity to pass affordability tests.”
3. A Lifetime Allowance: The blog admits this could be complex and may penalise those who are obliged to move home often, but “this would support first time buyers and second steppers.”
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