Leading regional estate agent Mullucks Wells has called for the new Government to apply the same logic to Stamp Duty on property purchases that historically has been applied to Corporation Tax.
Residential Director William Wells says that as the rate of Corporation Tax in the UK has come down over the years, the amount collected by the revenue has actually gone up.
He explains: “It sounds counterintuitive, but it’s true. The lowest ever rates of Corporation Tax have led to the highest ever amount of income for the Treasury - currently standing at £56bn. This is because low Corporation Tax encourages companies to come here, hire staff, and do business – all of which means the amount of tax collected actually rises.
“The same would apply to Stamp Duty, which is currently paid by everyone buying a property over £125,000 – starting at 2% of the property value up to £250,000, 5% up to £925,000, a huge 10% up to £1.5m, and an eye-watering 12% for properties over that top figure. These extortionate rates have had a massive impact on people’s ability to move house at what is already a very expensive time in their lives. And there’s no question that the new highest rate has caused a collapse in the number of sales of more expensive properties.
“Just as high rates of Corporation Tax drive business away, cutting jobs and wealth creation, all the evidence indicates that the effect of leaving the middle and top rate of Stamp Duty at these ridiculous levels is costing the government coffers a considerable amount of money in lost revenue directly through a lack of transactions. Stamp Duty needs to be lowered, and lowered immediately.
“Of course, there’s no denying that an increased number of sales would be good for estate agents. But more importantly, it would also be good for buyers who would benefit from the lower rates, the market as a whole which would become more fluid, and good for the UK economy which would have a significant injection of additional tax as a result.”