Major changes to the way properties are taxed could be introduced if Boris Johnson becomes Prime Minister, including switching the stamp duty burden to the seller.
As the two Conservative party leader contenders continue to battle it out, Boris Johnson has promised to make big changes to the “absurdly high” levels of stamp duty in the country.
As well as revealing his plans to abolish the tax altogether for properties below £500,000, Johnson has now met with the Association of Accounting Technicians (AAT) to discuss the more radical idea of sellers footing the bill for stamp duty on properties.
He claims that the housing market is “locked up” at the moment because of stamp duty putting off buyers, and while he has not put a figure on the cuts he would bring in, he confirmed “we will certainly be looking to do that because I think actually you can do that in such a way as to increase revenues if you get it right”.
Sellers instead of buyers footing the bill
The AAT has long since been an advocate for this switch from buyer to seller, arguing that it would be a way of cutting stamp duty for all first-time buyers without it costing the government anything, while also making it more affordable for people to upsize as their tax bill would be lower when selling their existing property and they would be able to afford a more expensive new property.
Phil Hall, AAT head of public policy and public affairs, said: “AAT is naturally pleased that Boris has agreed to look at our long-standing proposal to switch stamp duty liability from the buyer to the seller.
“This will save the taxpayer £700m a year by rendering First Time Buyers Relief redundant. It will also protect the £9bn of revenue stamp duty generates as it will still be paid in full, simply by different people.”
“It’s much more progressive too, as it will be paid on the lower priced property being sold rather than the higher priced property being bought.”
Downsizers would pay more
Other benefits to the market, according to the AAT, as well as helping people onto and higher up the property ladder, includes opening the market up to more buyers, making stamp duty fairer, and addressing the issue of intergenerational fairness.
However, those who own large, expensive properties that are looking to downsize may not be thrilled by the turnaround as it would mean their stamp duty bill could be significantly higher.
When commenting on the stamp duty switch proposals last year, the AAT argued: “In the majority of cases, although not all, downsizers will have little or no mortgage to pay and will have significant equity. Downsizers are therefore likely best placed among all homeowner types to pay a little extra, certainly better placed than first-time buyers who are typically the younger generation.
“It could also be argued that once liability has been switched and the system has been in place for a few years, downsizers are likely to have benefited from the seller pays regime to have got to where they are on the ladder.”
Use our stamp duty calculator to work out what you would need to pay with the current system.
