Wednesday, July 04, 2012
CML News and Views this week includes
an article setting out the various options for reforming Stamp Duty
Land Tax (SDLT) in the UK. The article concludes that:
The Council of Mortgage Lenders has long advocated a fundamental
residential Stamp Duty, away from its current "slab" structure
(under which duty is charged at the highest rate on the whole
purchase price, including the parts below lower thresholds) to a
marginal rate system similar to income tax.
"Current market conditions may mean that, in many parts of
the UK, liability to SDLT represents a material factor influencing
house purchase decisions.
"There would be significant benefits in reforming stamp duty
in favour of a marginal rate system. SDLT, as the Mirrlees Review,
a five-year study of the UK tax system under taken by the Institute
of Fiscal Studies, commented, is 'highly inefficient,
discouraging mobility and meaning that properties are not held by
the people who value them most, and its 'slab' structure - with big
cliff-edges in tax payable at certain thresholds - creates
particularly perverse incentives.'"
"While it would be possible to re-design the system so as to
preserve Government revenue, this may well give rise to substantial
winners and losers. At the UK level, this may leave stamp duty
reform on the sidelines, especially in a period when the
Government's broader fiscal strategy makes it difficult to forego
It also concludes that SDLT needs to be reconsidered in the
context of NewBuy - where a 5% deposit can be supplemented by a
further 3% in Stamp Duty costs.