Stamp duty may be replaced by property tax – report

A newspaper has revealed that the Treasury is considering a new tax on the sale of homes worth more than £500,000 as a step towards a radical overhaul of stamp duty and council tax.

The Guardian says Whitehall officials are examining a potential national property tax, which would replace stamp duty on owner-occupied homes.

Quoting unnamed sources, The Guardian says the officials are also studying whether, after the national tax, a local property tax could then replace council tax.

The newspaper says, in an exclusive posted on its website:

“The policy options are being considered as part of a large tranche of work within the Treasury aimed at tapping into the vast cumulative rise in house prices in recent years that risks entrenching inequalities and making council tax – which is based on early 1990s property values – more unfair.”

The national tax would be paid by owner-occupiers on houses worth more than £500,000 when they sell their home. The amount paid would be determined by the value of the property, with the rate set by central government, which would directly collect the proceeds via HMRC. It would not replace stamp duty on second homes.

Only around 20% of current residential sales involve properties over £500,000.

The newspaper’s sources suggest the government is acting on the findings of a report by the centre-right think tank Onward. This proposes a dual approach of a national and local “proportional property tax” on property, based on its value.

The idea of a new local annual property levy to replace council tax was also proposed by Onward.

That plan would result in owners, rather than the residents, of a property worth up to £500,000 paying varying rates of tax dependent on the value of their home. They would pay a minimum of £800 a year and the funds this generates would go directly to local councils, whose finances have been severely stretched in recent years.

You can read the full Guardian article HERE

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