Should We Abolish Stamp Duty?

BonzoBanana My son has recently purchased the house they have rented for years, it was a case of now or never as he and his wife are not getting any younger. They are not wealthy/rich but in that area houses are not cheap and son goes to school there. They had to pay stamp duty and the house is just 2 double one single beds, small bathroom and downstairs all in one lounge, kitchen, diner. It cost £395k.

Because he bought a flat in his youth but then sold it he was not considered a 1st time buyer even though it was 25ish years ago.

So I do believe it should be scrapped or raised to a higher level before it is applicable.

Lynibis I'm far more happy increasing the threshold than abolishing it. I think 500,000 could be a good threshold because as you say quite average houses are hitting that mark or just below it. It's also a nice compromise position between those who want it abolished and those who want to keep it, a compromise by increasing the threshold. I guess inner London is also a special case where house prices are higher again.

Pjran Where would you put the extra burden of tax to pay for abolishing it? What tax would increase?

BonzoBanana I would increase income tax but give those lower earners a higher rate code before paying any tax.

Pjran That doesn't sound very good so everyone has to subsidise those rich enough to buy multimillion homes without stamp duty. You would be transferring a lot of taxation typically paid by the rich onto those just above low earners. So someone buying some amazing £200 million home that might have paid £30 million in stamp duty gets to keep £30 million and loads of people on lets say £30k a year have to pay. Looks like the government gets £15 billion or just over from stamp duty each year. Share that by every working person its like £600 extra tax per year on everyone who pays income tax which is quite a lot. It's clear the rich don't want to pay it but there are more of us poorer people who rather they did pay it I'm sure. £600 extra tax is a huge amount. Many people are struggling as it is, £50 less a month in take home pay is a significant amount of money.

BonzoBanana I hear what you’re saying but many families struggle to buy a home and there’s nothing available under the stamp duty here. Maybe only have stamp duty payable on £2 million plus properties and increase income tax. Bring back paying tax on dividends at source too.

Pjran Raising the threshold to £2 million seems far too high to me. Maybe £500K and then £750K in inner London for thresholds but £2 million would certainly not be my choice. If you need 4.5x your income to get a £2 million mortgage that is a income of about £400k a year. If you have a family with a combined income of lets say £100k a year, i.e. £50k each then that would give you a mortgage up to around £450k so I feel like £500k is a good threshold. I'm sure it would still put some extra burden of tax elsewhere but hopefully low levels if on income tax. A huge amount of people are forced to rent and seems unfair they are forced to pay more income tax so others can get a mortgage though. I personally feel sales tax should be increased as increasing sales tax on some items could help slow down some imports which would reduce our trade deficit and reliance on borrowing. Less tax on food and energy and more tax on imported products. Some countries have a 30% sales tax and I feel that would definitely be suitable for the UK on some products. We need to get back to repairing and refurbishing goods.

Pjran I have always believed that economists should work out an average cost of keeping a family with essential bills, rent, mortgage food allowance, commuting etc. Add a couple of grand and that is where the tax threshold should start. Probably around £20k.