2020 Budget - Stamp Duty...

[Mulberry View]

I'm not an avid follower of current affairs, but I have seen mention of a possible reform of SDLT in the March budget.

 

What is the general feeling on this from those that have a better knowledge of such matters than I do? If a change were to appear out of the back of the budget, would this take effect immediately?

 

Either way, I'm sure we'll miss it, but by a frustratingly narrow margin as our purchase has to complete on/before 13th March. 

[Markblox]

I also have this on my mind but the bill would be quite small as we are not seriously over the threshold.  Fingers crossed.

[ProDave]

All I know with the spending proposed, a lot of extra tax is going to have to some from somewhere.

[vivienz]

Second homes is an obvious one to go for; this will affect any self builders who keep their own property whilst building the new one, as well as any buy to let purchases. 

[recoveringbuilder]

3 hours ago, vivienz said:

Second homes is an obvious one to go for; this will affect any self builders who keep their own property whilst building the new one, as well as any buy to let purchases. 

This is already the case, I know two friends who have bought property whilst still owning their main home, one in particular paid an extra £10k in ‘stamp duty’ . Currently you have 18 months to dispose of one of your properties and can then claim it back.

[vivienz]

2 minutes ago, Christine Walker said:

This is already the case, I know two friends who have bought property whilst still owning their main home, one in particular paid an extra £10k in ‘stamp duty’ . Currently you have 18 months to dispose of one of your properties and can then claim it back.

 

I was thinking more along the lines of not being able to reclaim it. I just got in on my own reclaim with 1 month to spare before the end of the 3 year limit that applies to England.

[Ferdinand]

4 hours ago, ProDave said:

All I know with the spending proposed, a lot of extra tax is going to have to some from somewhere.

 

I'd expect to see certain extra taxes, but the Tory Manifesto left headroom for approx £20bn a year of extra investment - which would pretty much cover the stuff I have heard about.

 

They created that headroom by relaxing the limit on the govt deficit to 3% of GDP , which I think is historically a prudent level. Given that most of our national borrowing is on low fixed interest rates over longer terms than most other Western countries (the BofE are startlingly better at managing the debt than all the others which was to our huge benefit in 2010) - info on BofE website - I think they may know what they are doing.

 

The 100 bn+ figure for HS2 is an upper bound of a range and is massively inflated by anti-campaigners and the type of assumptions that place 30 years of management risk in the number. There is some good debunking by the  editor of Rail News.

 

Having said that,  CGT takings seem to be at an historical high thanks to Landlords getting out or  incorporating.

 

F

 

Edited February 11, 2020 by Ferdinand

[Temp]

Don't know if any of you are 40% tax payers (I'm not) but there is a lot of speculation he might limit pension tax relief to the lower rate. One article suggested a level 25% so "high rate payers level down, low rate payers level up and the government raise £5bn in tax.

 

I think he may also increase the £1m limit as that's causing problems for high earning doctors.

Edited February 11, 2020 by Temp

[newhome]

16 minutes ago, Temp said:

Don't know if any of you are 40% tax payers (I'm not) but there is a lot of speculation he might limit pension tax relief to the lower rate.

 

41% up here. I read that re tax relief. Wait and see I guess. The change would likely be a disincentive to people paying into a pension. People are distrustful about pension rules changing in general and a big change such as this would just confirm their suspicions. 

 

[eandg]

The additional 

15 hours ago, vivienz said:

Second homes is an obvious one to go for; this will affect any self builders who keep their own property whilst building the new one, as well as any buy to let purchases. 

Don't think that's correct if it's brought in the way it has been done in Scotland where we have an 'additional dwelling supplement'. I expected to pay when buying land but the clue is in the name - it's for dwellings not land. 

[vivienz]

38 minutes ago, eandg said:

The additional 

Don't think that's correct if it's brought in the way it has been done in Scotland where we have an 'additional dwelling supplement'. I expected to pay when buying land but the clue is in the name - it's for dwellings not land. 

 

I'm not familiar with the Scottish system, which is why I specified England. Under English law, if you buy a second property whilst retaining your main residence, you pay a stamp duty surcharge of 3% on the entire amount of the purchase. You currently have 3 years to sell the old property and reclaim the surcharge. This has been the case for a few years now and applied when we bought ours in February 2017.

My point in response to the OP was that it would be a relatively easy way to raise some tax to remove the ability to reclaim the surcharge.

[eandg]

1 hour ago, vivienz said:

 

I'm not familiar with the Scottish system, which is why I specified England. Under English law, if you buy a second property whilst retaining your main residence, you pay a stamp duty surcharge of 3% on the entire amount of the purchase. You currently have 3 years to sell the old property and reclaim the surcharge. This has been the case for a few years now and applied when we bought ours in February 2017.

My point in response to the OP was that it would be a relatively easy way to raise some tax to remove the ability to reclaim the surcharge.

Yes - but I don't think any second homes tax will affect self-builders (unless that is they buy an existing home to demolish and rebuild on site, as it's a tax on homes not on land. 

[newhome]

11 hours ago, Temp said:

Don't know if any of you are 40% tax payers (I'm not) but there is a lot of speculation he might limit pension tax relief to the lower rate. One article suggested a level 25% so "high rate payers level down, low rate payers level up and the government raise £5bn in tax.

 

I think he may also increase the £1m limit as that's causing problems for high earning doctors.

 

Thinking about that some more .... 

 

so if they cap tax relief at 20% those on the higher rate of tax who are paying into their pension will pay 20% (or 21% in Scotland) tax on that money immediately. If they end up with a decent pension pot they could then be paying higher rate tax when they draw their pension. Doesn’t that have the effect of being taxed twice on the same money? These doctors you speak of could be in that position. 

 

 

[Ferdinand]

10 hours ago, newhome said:

 

41% up here. I read that re tax relief. Wait and see I guess. The change would likely be a disincentive to people paying into a pension. People are distrustful about pension rules changing in general and a big change such as this would just confirm their suspicions. 

 

 

I think Scottish changes would follow a couple of years later, and (obvs) be blamed on the English ?., whilst probably also incorporating an innovation or two.

 

I hear that there will be generous stuff for first time buyers from the locality - to the extent of reducing the purchase price by a third. Which will be good depending on who it helps.

 

I also hear that there will be quicker routes to planning permission, in order decisively to reach build targets of 300k per year. I hope that that includes build quality measures. They have made very significant build volume progress over the last decade, and I think they want to nail that one as legacy.

 

The measure I would like to see is dealing with London - and for me that is either:

 

1 - a high density redevelopment of one of the large Council Estates to provide most of a decade or more of housing growth. By high density I mean 200-300 dwellings per hectare. It is normal elsewhere.

2 - lift Greenbelt Restrictions (parts of the London Greenbelt are a mess of scrub and brownfield).

3 - a dozen garden cities.

 

They won't touch that .. too political.

 

Potentially over a generation rebalancing north may help that.

 

Ferdinand

 

[Ferdinand]

2 hours ago, eandg said:

The additional 

Don't think that's correct if it's brought in the way it has been done in Scotland where we have an 'additional dwelling supplement'. I expected to pay when buying land but the clue is in the name - it's for dwellings not land. 

 

I would say it is perhaps more likely to affect how long you have to build it.

 

IIRC in England the squeeze has been on the timescale you have to reclaim the Stamp Duty. I could be mistaken there, however.

[Ferdinand]

Apologies for a third post.

 

I think there may be a few clues on proposed Planning Reform in the Architectural Beauty Commission (more Bs in the name that Billy Blinking Bremner) Report - The Roger Scruton one. That came up with 75 recommendations - some rather nebulous, some quite interesting.

 

Digital Building Passports is one of the more interesting ones imo.

 

Attached.

 

Ferdinand

 

Living_with_beauty_BBBBC_report.pdf

Edited February 12, 2020 by Ferdinand

[vivienz]

57 minutes ago, eandg said:

Yes - but I don't think any second homes tax will affect self-builders (unless that is they buy an existing home to demolish and rebuild on site, as it's a tax on homes not on land. 

 

Many self builders, such as myself, do precisely that.

[Moonshine]

12 hours ago, Temp said:

Don't know if any of you are 40% tax payers (I'm not) but there is a lot of speculation he might limit pension tax relief to the lower rate. One article suggested a level 25% so "high rate payers level down, low rate payers level up and the government raise £5bn in tax.

 

Its an interesting idea, and one personally i don't like, but if it changes to a level 25% then probably one that i could stomach as if it encourages more people on lower incomes to contribute to their pensions.

 

Now if only the government would look at the high income child benefit tax charge criteria!

Edited February 12, 2020 by Moonshine

[pudding]

1 hour ago, newhome said:

 

Thinking about that some more .... 

 

so if they cap tax relief at 20% those on the higher rate of tax who are paying into their pension will pay 20% (or 21% in Scotland) tax on that money immediately. If they end up with a decent pension pot they could then be paying higher rate tax when they draw their pension. Doesn’t that have the effect of being taxed twice on the same money? These doctors you speak of could be in that position. 

 

 

 

Yup, that will indeed be the case. I'm lucky enough to earn a good salary and be in the same position as doctors and stuck with PAYE so cant avoid it. Atm, we try and stay below £100k/yr to avoid the marginal rate where you lose your tax free allowance and would have an effective tax rate of 62% above £100k, and one way of doing that was to pay into the pension. A flat 20% relief will now make that a bit pointless and possibly be avoided, and even more of my colleagues will go part time as it's pointless working so hard and long for a little extra money. I'm going part time in a couple of months, and the marginal tax rate did enter my thinking as each years pay rise makes it harder and harder to avoid big tax bills somewhere (other lifestyle reasons were the main factor though, although a drop from 40-20% tax relief will make this issue become more front and center in future, and the end result will be less tax take for HMRC and we simply work less). First world problems tho....

[Ferdinand]

2 hours ago, Moonshine said:

Its an interesting idea, and one personally i don't like, but if it changes to a level 25% then probably one that i could stomach as if it encourages more people on lower incomes to contribute to their pensions.

 

I think the sore thumb is that the vast majority of pension tax relief money goes to higher rate taxpayers, whilst they want it to benefit lower income groups.

 

I think I would support an adjustment - now sure how far.

 

And because it is already capped quite aggressively (40k max, relief lost over 150k income iirc) there is probably space for a somewhat gradual adjustment. Pros and cons need careful consideration, though.

 

But I think we have a budget coming with significant changes.

 

Ferdinand

 

Edited February 12, 2020 by Ferdinand

[newhome]

3 hours ago, pudding said:

and the end result will be less tax take for HMRC and we simply work less

 

Indeed. I have been paying the full annual allowance into my pension ever since the tax rates were raised in Scotland. I now pay a lot less tax than I used to before the change. I will be rethinking that if the relief drops to 20% or even 25%, plus I’ve hit the lifetime allowance now too. Reducing my hours to reduce my tax bill seems to be an attractive way forward. Like you I’m on PAYE so am restricted to a handful of things to reduce my tax liability, eg purchasing additional holiday and buying the maximum number of shares in the SIP scheme. Small fry when compared to the pension tax relief however.