A think tank wants the government to scrap stamp duty and replace it with an annual property tax based on capital value.
Bright Blue says its tax commission - which it calls “cross party, cross sector” - recommends an annual proportionate property tax (APPT) on the current capital value of houses with a tax exemption for properties worth up to £50,000 and a 25 per cent surcharge for second home owners.
Liability to pay would be with owners, not occupants. A single low tax threshold of initially £50,000 should be introduced, set to rise with house prices over time.
It also says the APPT should be in two parts - one levied by national government and the second by local authorities.
To address other issues concerning property the APPT should include opportunities for offsets applied to improve energy efficiency, and it should have a variation applied to new builds - a development levy set at 20 per cent of the realised market price of newly constructed houses.
Former Tory MP David Gauke, a one-time Treasury minister, says: “No one could argue that our current system of property taxes is ideal and this paper makes a powerful case for fundamental reform on the grounds of economic efficiency and fairness. This is a valuable contribution to the important debate on how we should reform our property taxes.”
And current Labour MP Margaret Hodge adds: “Our existing system of property taxation in the UK is deeply flawed and highly regressive. This timely paper from Bright Blue lays out a credible proposition for how we might tackle the inequity of this system. These recommendations are worthy of serious debate in the hope that a wide consensus can be formed on how to solve the intractable problem of taxing property.”
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That sounds ridiculous to me. We already pay CT which is a property tax in itself. How could it possibly be fair to introduce a property tax on property where SDLT has already been paid at the time of purchase v's those who buy property in the future and don't pay and SDLT ??
I sound like a broken record but - transaction taxes (like stamp duty) are bad taxes as they inhibit transactions and flow, stop marketplaces functioning well and inhibit economic activity. Usage taxes (such as APPT or MPPT (monthly proportional property tax)) are much more effective and support the more efficient and effective use of the assets or item that they tax and in turn increase utility, economic activity and as a result generate more tax. It can be easily seen what the removal of stamp tax has done for economic activity during the pandemic, a substantial boost by any measure. Of course some of the activity is a result of the possibility of the stamp tax reduction being temporary but much is also due to the simple fact that the tax for certain property values is zero which has got people moving.
Sorry but this is an absolutely awful idea..... one time tax (stamp duty) or pay forever with this idea? i know what i would choose.
We should pay less complicated taxes not more , Tax when you earn , Tax when you buy , Tax 40% when you die , Tax on savings , Tax Tax Tax !!!
Another waste of space roaming the planet dreaming up dumb ideas.
This is a flawed proposal for a number of reasons, mainly there are many who struggle to pay their current council tax now, how are they to afford the increase? Secondly, as Prakash says, what about the people who have already paid SDLT, will there be an offset? A tax when you sell is another solution as this is when you can afford it the most, but again what about the SDLT already paid, will there be an offset? The slab structure was wrong, the graded structure is confusing so why not go back to a flat rate of say 5%. The more we sell, the more HMRC gets, simples!!
this think thank is crazy its does not make sense other than to just turn into authoritarian government
whichever government implements this can go and .... right off.......! (Apologies for my language!)
Having paid over £30k in Stamp to buy our current home I would be very aggrieved to having to pay further tax as a result of any changes. Perhaps, a change would be simply for Vendors to pay it rather than buyers. Vendors have invariably made a profit and have no CGT to concern themselves with for a primary residence. It would likely increase the prices to the buyer, but, at least then the cost would be in the form of a debt against the property (mortgage) rather than years of savings.
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