Stamp duty holiday
![Mark Arnold](https://connectbrokers.co.uk/wp-content/uploads/2020/12/Mark-Arnold-CEO-Kensington-Mortgages.jpg)
Mark Arnold, CEO of Kensington Mortgages, comments:
“This research shows the stamp duty holiday’s positive impact on the economy during a crucial time. The threshold level appears ready for permanent reform. Upper bound estimates suggest the Treasury could benefit fiscally while boosting the economy. It might unlock housing market activity and fund 4,000 additional nurses simultaneously.
Furthermore, updating the threshold to reflect real-world house prices could solve structural issues in the UK housing market. Maintaining the £500,000 threshold could enhance regional mobility with trickle-down benefits. It could also stimulate downsizing, freeing family homes and addressing the stock shortage. Now is the time to be bold. We should keep the threshold as it is or consider raising it above £125,000.
The findings show that extending the current SDLT, LBTT, and LTT holidays could cost the UK Treasury £3.9 billion annually. However, the table below summarises potential recuperation between £2.3bn and £4.1bn.
In conclusion, the stamp duty holiday has proven beneficial. Reforming the threshold could continue to drive economic growth and address housing market issues. The potential fiscal benefits should encourage policymakers to consider permanent changes.”
Property transactions, collective wealth and household consumption will increase.
Estimates from the CEBR suggest reducing stamp duty would result in 37,000 more property transactions yearly. This increase could generate £266 million in annual revenues.
Influence on House Prices
Future house prices could rise by an average of 1.3%. Moreover, the structure of SDLT implies a greater increase in higher-value properties. Consequently, this could lead to a 1.9% rise in households’ collective property wealth. Higher property values could boost SDLT, LBTT, and LTT receipts by £256 million annually.
Increased Revenues to the Treasury
Higher property values and transaction numbers could generate £523 million in annual revenues for the Treasury. With a significant share of households’ wealth tied to property, housing price movements greatly affect total wealth levels in the UK.
Economic Impact
The analysis shows that a rise in house prices would lead to a £113 billion increase in households’ collective net wealth. This wealth increase could drive a 0.36% to 0.75% rise in household consumption. The Stamp Duty Holiday plays a crucial role in this scenario.
Indirect fiscal impacts on capital gains tax
As per HMRC reports for the fiscal year 2017-2018, residential property transactions subject to capital gains tax (CGT) accounted for a substantial £26.6 billion. The incremental surge of 1.9% in overall property wealth suggests a potential annual escalation of about £505 million in residential property transactions where CGT is applicable.
This data underscores a notable trend in the housing market, indicating a consistent growth trajectory in CGT-eligible property transactions. The figures reflect the increasing monetary dynamics within this sector and point towards a broader economic landscape where residential property transactions subject to CGT could experience a continuous uptick, contributing to the overall fiscal momentum.
We’ve ended our article on “Stamp Duty Holiday.” until next time, stay Connect!