The chancellor Rishi Sunak is once again being urged to abolish stamp duty and replace it with a new levy.
The think tank Bright Blue argues that scrapping the stamp duty holiday would stimulate greater activity in the housing market.
It wants to see stamp duty abolished, along with council tax, and both replaced with an annual property tax instead.
The new annual proportional property tax (APPT) would seek to raise the same amount for the government as existing property taxes, but more closely reflect the value of homes than the current system that includes council tax valuations dating back to 1991.
Ryan Shorthouse, chief executive of Bright Blue, the think tank that published the report, said it would help to level up the UK by focusing taxes on the better-off.
He commented: “The current property taxation system in England is regressive and distortive. It provides significant advantages to those who have – or are from families with – substantial wealth, and is quite punishing to those with relatively little.
“An APPT system would change that, making property tax liabilities much more manageable for those from modest backgrounds and areas.”
The new property tax, which would charge the owner 0.11% of the property’s value each year for the central government, plus a local charge set by councils, has been proposed by economists Paul Cheshire and Christian Hilber and backed by politicians including Labour’s Margaret Hodge, Conservative Lord Willets and Lib Dem Sir Vince Cable.
The new levy would rise to 0.14% for second homes, and include “green offsets” for environmentally friendly home improvements.
Homeowners in areas with low property prices would typically be better off under the proposal.
A poll by The Telegraph, which attracted over 5,000 votes, found that 75% oppose the proposal to scrap council tax and stamp duty and replace them with an annual wealth levy on housing.
A Government spokesperson said: “An annual house price tax would mean soaring bills for many hard-working families and pensioners who have saved and improved their homes. We have no plans to make these changes.”
Buying agent Henry Pryor yesterday took to Twitter to pose the following question: ‘Would you rather pay tax when you buy a property (roughly £10k on an average home) or pay an annual tax of 0.11% (0.14% for 2nd home) of the value of your home?
Result (440 votes):
53% Stamp Duty Land Tax
47% Annual Property Tax
Comments (7)
Stamp duty (possibly financed by a mortgage) is a purchase cost that is usually redeemed for owner occupiers by long term tax free growth. Additional annual property taxes would become an outgoings burden settled from after tax earnings whilst you still have a job or the income to afford them.
In tenanted property, who pays the proposed annual tax?
Perhaps it’s time, to include on sales information, the total cost of purchase to include all taxes
I’ve always felt if you could finance Stamp Duty it would streamline matters, or at least have a retention in the mortgage.
Selfishly and biasedly, I’d love to see a shake up in council tax. Always begrudged selling properties in Westminster & Brent who’s council tax are significantly less than my £2.2k pa, yet the property values exceed 3 times than that of my own!
We’re not British if we don’t start the day with a moan.
These numbers dont add up for me…. So if its 0.11% pa for central Govt the local Govt charge must be massive by comparison?
e.g. 4 bed house in Cardiff value £600K Council Tax Band H so current Council Tax = approx £3200 pa
New tax £600,000 x 0.11% = £660pa for Central Govt so £2500 shortfall?
Tax tax tax – completely out of ideas how to generate investment in the UK which would be taxed and thus relieve the populace of being taxed in the first place
So very true, sadly our MP’s appear now to be lacking in the skills of so many in the past to help us create more wealth, only to remove it from us by higher and higher taxation or regulation.
How about abolishing SDLT altogether along with Council Tax.
Then have a new tax on every person in the UK as they all use the resources of local and Govt wide communities.
You could call it the Community Charge
So roughly 80 million adult population each paying about £100 per month.
That should cover the loss of CTax and SDLT.
Seems like a very effective and fair tax to me!
I think they tried a version of that call Poll Tax ….. from memory did not go down well