The next government should apply the same logic to Stamp Duty that has historically been applied to Corporation Tax in order to increase tax revenue, insists an estate agent.
Ahead of Thursday’s (8th June) General Election, William Wells, the Residential Director of Mulluck Wells in Hertfordshire and Essex, points out that as the rate of Corporation Tax has come down in the UK over the years, the amount collected by HM Revenue & Customs (HMRC) has actually gone up.
He explains: “It sounds counter-intuitive, but it’s true. The lowest ever rates of Corporation Tax have led to the highest ever amount of income for the Treasury – currently standing at £56 billion.
“This is because low Corporation Tax encourages companies to come here, hire staff, and do business – all of which means the amount of tax collected actually rises.”
He continues: “The same would apply to Stamp Duty, which is currently paid by everyone buying a property over £125,000 – starting at 2% of the property value up to £250,000, 5% up to £925,000, a huge 10% up to £1.5m, and an eye-watering 12% for properties over that top figure.
“These extortionate rates have had a massive impact on people’s ability to move house at what is already a very expensive time in their lives. And there’s no question that the new highest rate has caused a collapse in the number of sales of more expensive properties.”
Wells believes: “Just as high rates of Corporation Tax drive business away, cutting jobs and wealth creation, all the evidence indicates that the effect of leaving the middle and top rate of Stamp Duty at these ridiculous levels is costing the Government coffers a considerable amount of money in lost revenue directly through a lack of transactions. Stamp Duty needs to be lowered, and lowered immediately.
“Of course, there’s no denying that an increased number of sales would be good for estate agents. But, more importantly, it would also be good for buyers, who would benefit from the lower rates, the market as a whole, which would become more fluid, and good for the UK economy, which would have a significant injection of additional tax as a result.”
Although he does not mention whether the Stamp Duty surcharge on additional properties should be cut, would Wells’ proposal encourage you to purchase more rental homes?
If you are still unsure of who to vote for on Thursday, this analysis from eMoov shows which political party has been the best for house price growth since 1970: https://landlordnews.co.uk/best-political-party-house-price-growth/