United Kingdom: UK Buyers Count Cost Of Stamp Duty
27 August 2013
Posted by: Author: Robert Lee
Author: Robert Lee
Four out of every five UK homes purchased in 2012-13 will be subject to stamp duty within the next five years, the TaxPayers' Alliance has said.
Stamp Duty Land Tax (SDLT) is charged at either 1, 3, 4, 5, or 7 percent of the total purchase price of properties costing more than GBP125,000 (USD194,553).
The TaxPayers' Alliance has looked at the Land Registry's monthly property transactions data, and compared it with information from HM Revenue and Customs (HMRC) to determine the amount of SDLT payable. The results relate to transactions carried out in England and Wales during the period from April 1, 2012 to March 31, 2012.
With property prices expected to spike over the next five years, the Alliance has warned that by 2017-18, two-fifths of properties will be subject to SDLT at 3 percent or more. The price of a third of all properties within the 1 percent SDLT bracket in 2012-13 will have risen above the 3 percent SDLT threshold in just five years' time. This means that the average tax bill for these properties will go up from GBP2,319 in 2012-13, to GBP8,445 by 2017-18.
Unsurprisingly, properties in London are the most likely to attract SDLT. By the end of 2017-18, 99 percent of all London properties will be liable, with five out of six subject to the 3 percent rate. The East Midlands can expect to see the fastest increase in the number of liable homes, up from 50 percent last year to 71 percent by 2017-18.
In five years, SDLT will be applicable to more than half of all homes in every region in England and Wales.
Matthew Sinclair, Chief Executive of the TaxPayers' Alliance, said: "As the property market recovers, more and more people will be sucked into paying punitive rates of Stamp Duty and it will be more expensive to move than ever. High Stamp Duty rates stop young people buying a home and starting a family, discourage elderly people from downsizing and make it harder to move to a new place for a new job. The Government urgently need to cut Stamp Duty and ease the burden before the situation gets even worse."