Review of Stamp Duty and Land Tax Required   

Recent data produced by HM Revenue and Customs shows half the number of residential properties were sold in May compared with a year ago amid coronavirus lockdown measures. A total of 46,230 property transactions were completed during the month, down 52% on the same month last year. 

Although demand is increasing post lockdown, there’s an urgent need to kick-start the UK economy with a review of Stamp Duty Land Tax and Building Transaction Tax in Scotland. The state of the housing market is an accurate indicator of the UK economy, and as such, it’s vital for the government to review tax rates on property transactions across the country. 

Now is an opportune time for the government to make necessary changes and a reduction in tax on certain transactions could directly increase the volume of properties being sold, subsequently benefitting the government and what can be obtained.   

As it stands, the rate of tax on a second property prevents many individuals from buying an additional dwelling, either as a second home or a property to let. This tax varies from 3–4% depending on which part of the country you’re in. Not everyone who purchases a property is a multi-millionaire. For those who have aspirations to buy a second property to supplement their pension, the additional tax can be very restrictive and prove to be a real deterrent.  

A tax shift could be a real opportunity to kick-start the economy post COVID-19; a reduction in rates would increase the number of transactions taking place. The concept of increasing tax is not necessarily a direct benefit to the economy, as it can result in fewer actual transactions taking place.  

There’s also a pressing need for the government to assist those who are making their last move by reducing associated taxes on their final property transaction. Many retirees are keen to downsize and move into a property that’s more suited to their lifestyle, however, in many circumstances they decide to stay put due to the associated costs and the impact on family inheritance. By implementing a tax-free final property purchase, the volume of transactions at the top end would also increase and subsequently bolster the economy.