Stamp Duty Land Tax, more commonly referred to as Stamp Duty is not only yet another iniquitous government tax on property, it is a tax designed by idiots – but no surprise there! See our Poll below…
Stamp Duty Thresholds on Residential Properties (October 2014)
- £0 to £125,000 – No Tax
- £125,001 to £250,000 – 1%
- £250,001 to £500,000 – 3%
- £500,001 to £1 million – 4%
- Over £1 million to £2 million – 5%
- Over £2 million – 7%
Look at the Stamp Duty thresholds above. This shows the real idiocy of Stamp Duty. As soon as a property transaction exceeds a specific amount – even by a £1.00, the WHOLE of the transaction is subject to the next level of tax! Thus if you buy a property for £250,000 you will pay £2500.00 in Stamp Duty, whereas if you paid £250,001 you would pay £7500.03 in Stamp Duty!
As far as really expensive property is concerned, it’s even more ridiculous. Take an example of a property selling for £2 million the Stamp Duty would be an incredible £100,000. But – if that same property sold for £2,000,001 the Stamp Duty would be…£140,000.07! In other words about £40,000 more.
Distorting the market
Apart from being an outrageous amount of money, this of course badly distorts the property market, with sales just above one of the thresholds being incredibly hard to achieve. So, a property valued at £250,000 really achieve £300,000 before you can get the real value when you sell, because buyers will be put off houses that are advertised for say £265000 and will try everything to push them below the threshold.
Of course, because this tax, via fiscal drag, now accounts for such a huge amount of money, people try to avoid it. There are various schemes dreamed up by clever property lawyers that involve arcane and complex procedures to avoid SDLT but they are of course risky. Also, some people claim that part of the price includes fixtures and fittings such as kitchens – but really there is no way to safely avoid this scurrilous tax.
What we need is for politicians to wake up to the stupidity of this tax and if it really has to be at these levels then it should work in the same way as income tax and tax the marginal amount by which a sale price crosses a threshold. An example would be say a property selling for £260,000 would bear 1% on the first £250,000 and 3% on the final £10,000. Also, why on earth does it jump from 1% to 3%!
In conclusion, the reason this tax exists in its present form is because it does. Civil servants and politicians often are incapable of original thought and just go on doing something in the way it’s always been done – just because that’s the way it’s always been done.
Tell us what YOU think
See our Stamp Duty Poll below…