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Please Mr Chancellor, ease up on Stamp Duty

In years gone by Budget Day was brightened up by a lively betting market on all sorts of predictions.

Autumn statement pic 1

How much on fags and booze was a popular market and there was usually someone offering a spread-bet on the length in minutes of the Chancellor’s Speech or particular words or phrases he might use– among the more meaty, important themes.

But these days the main points of the Budget have a tendency to “leak” out which gives the Chancellor a chance to test the temperature of some of the more controversial aspects of public finance for the coming years.

This has taken the fun out of it a bit but it does also give us an opportunity to examine the issues.

Tomorrow Phillip Hammond will open his red box and, judging from the press, he is examining two issues of concern to us.

The first is the private pensions system. The Times, Telegraph, and others are reporting he is ‘widely expected’ (this means it has been systematically “leaked” and likely to be true) to impose a flat rate of 30 per cent pensions tax relief to help fund social care – because it reportedly costs the Treasury £38.2bn a year in “lost” revenues.

This is bad news if you are a higher-rate tax payer, where it is now 40 per cent relief – but good news if you are not – where it is now 20 per cent.

For the second group this will make pensions a more attractive proposition from a younger age, which on balance must be a good thing.

Yet it might distract, in many ways, from our primary source of concern in this upcoming Budget.

The Family Building Society has long expressed deep concern that Stamp Duty rates, last reformed by George Osborne in 2015, are having the reverse effect than the desired ‘flattening’ and actually causing great harm to the housing market and the economy by clogging them up.

There is wide scale evidence talking to individuals that those property owners in later life, at the upper end of the market, are stuck there by a conspiracy of circumstances which are putting a stopper on it at a time where fluidity is called for – and first time buyers are left in a world of depositless desperation.

By ‘the later life, upper end of the market’, we don’t mean great country mansions or townhouses in Mayfair. We refer to a significant chunk of parents and grandparents who would like to downsize but can’t. They can’t because Stamp Duty (at 10 per cent over £925,000) is brutal to a potential buyer, there is tightened mortgage market criteria which restrict creativity in lending, and maybe a post-Brexit sense of low confidence for some.

This doesn’t help the Government either, since you can’t raise lovely tax lolly from transactions that aren’t taking place.

There isn’t much we, as a lender, can do about the first two of those conspiracies but we can raise our voices on policymaking.

So we say let common sense rule and reform Stamp Duty again.

What are the odds on that?

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Family Building Society
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Epsom
Surrey KT17 4NL
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