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Less impact for stamp duty holiday than forecast. Pearson May News Update - Thursday 31 December
- Less impact for stamp duty holiday than forecast
- Government support scheme secures £500 million in business loans
- Call for more competition among banks
Less impact for stamp duty holiday than forecast
The slowdown in the property market has meant that the stamp duty ‘holiday’ introduced by the government has not had quite the impact forecast for it.
According to the Council of Mortgage Lenders (CML), low levels of house sales have resulted in a loss of income to the government of £500 million through the scheme. The cost to the Treasury had been predicted to reach £615 million.
The holiday, which saw the threshold at which stamp duty becomes payable at 1 per cent rise from £125,000 to £175,000, was announced in September 2008 and lasted until the end of 2009. It was intended to help boost the housing property market during the recession.
James Tatch, a senior statistician at the CML, said: “There is no realistic chance of the government ‘spending its budget’ on this by the end of the year.”
The CML said it wants the government to overhaul stamp duty, which, the organisation claimed, causes distortions in the property market, clumping sales and values just below the thresholds at which the various tax rates start.
Stamp duty is charged at 1 per cent of the purchase price for properties between £125,000 and £250,000, at 3 per cent for properties costing over £250,000 and up to £500,000, and at 4 per cent for properties over £500,000.
The CML has put the case for a graduated tax system whereby stamp duty would be paid on the proportion of a property’s value that lies within each individual threshold.
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