You are here: Home - Mortgages - Buy To Let - News -

Abolish stamp duty, says leading think-tank

Written by:
The government should abolish stamp duty land tax, and replace it with a reformed council tax, according to a report from economic think-tank, the Adam Smith Institute.  

The Institute said that the UK’s £7.5trn is currently taxed in ‘strange and inconsistent’ ways. Residential council tax is based on a valuation system that hasn’t been updated since 1993; businesses pay at high rates; and homeowners pay rapidly escalating transactions taxes (stamp duty land tax – SDLT), but private residences are part-exempted from inheritance tax and exempted from capital gains tax.

It added that economists view transaction taxes as damaging, meaning they destroy almost as much wealth as they create. It pointed to a recent survey by the Australian government, which found that stamp duty destroyed 75p of wealth for every £1 raised. It said: “Taxing housing transactions keeps people in houses that are either too small, too big, or too far away from jobs, which are especially harmful when the housing supply is so tight, as it is in the UK today.”

The Institute proposed abolishing SDLT and replacing the lost revenues by reforming council tax, with a more proportional tax based on rental values. It said this would replace lost revenues to the Exchequer ‘easily’ with far smaller economic costs. It proposed a rationalisation of the UK’s property taxation system by abolishing SDLT altogether, and then rolling council tax, and business rates into one system, with everyone paying the same rate, set at roughly 20% of the equivalent rental income. It believes this could lead to large increases in revenue for the Exchequer over time.

The government collected £15.5m in stamp duty in the tax year to April 2017, up 17% on the previous year with London and the South East contributing 60% of the total.  However, surveyors and estate agents have said increases to SDLT are creating inertia in the market and the government should consider reform.

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

The savings accounts paying the most interest

If one of your jobs this month is to get your finances in order, moving your savings to a higher paying deal i...

Everything you need to know about being furloughed

Few people had heard of ‘furlough’ before March 2020, but the coronavirus pandemic thrust the idea of bein...

Coronavirus and your finances: what help can you get in the second lockdown?

News and updates on everything to do with coronavirus and your personal finances.

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

Having a baby and your finances: seven top tips

We’re guessing the Duchess of Cambridge won’t be fretting about maternity pay or whether she’ll still be...

Protecting family wealth: 10 tips for cutting inheritance tax

Inheritance tax - sometimes known as 'death tax' - can cause even more heartache for bereaved families. But th...

Travel insurance: Five tips to ensure a successful claim

Ahead of your summer holiday, it’s important to make sure you have the right level of travel cover or you co...

Money Tips of the Week

Read previous post:
Government to close child maintenance cheat loophole

Parents who avoid paying child maintenance will have money deducted from their accounts as the government’s set to close a...