Chancellor's stamp duty changes are 'ill-designed', says IFS
27 Nov 2015
The Institute for Fiscal Studies (IFS) has criticised the changes to Stamp Duty Land Tax (SDLT) announced by Chancellor George Osborne in this week’s Autumn Statement and Spending Review.
From 1 April 2016, higher rates of SDLT will be charged on purchases of additional residential properties (above £40,000), such as buy-to-let properties and second homes. The higher rates will be three percentage points above the current SDLT rates.
In his review of the Chancellor’s statement, IFS director Paul Johnson said: ‘The increase… of nearly £1 billion on second homes and buy-to-let properties is ill designed, not least because it reintroduces, albeit on a small scale, a cliff edge into the Stamp Duty schedule a mere year after the Chancellor made much of abolishing cliff edges in the Stamp Duty schedule’.
Buy-to-let landlords will also be affected by a change to capital gains tax (CGT) rules which means that from April 2019 they will have to pay any CGT due within 30 days of selling a property, rather than waiting till the end of the tax year.
Additionally, the change made in the July Budget, whereby from 2017 landlords will only receive the basic rate of tax relief of 20% on mortgage payments, will also have an effect on buy-to-let landlords.
Meanwhile, the IFS denied that the Autumn Statement signalled the ‘end of austerity’, suggesting that ‘very significant’ spending cuts would still need to be implemented before the end of the Parliament.
However, the think tank responded more positively to other measures announced by the Chancellor, describing them as ‘genuinely radical’.
Paul Johnson said: ‘Beyond the spending numbers and the welfare changes, though, we also saw…glimpses of George Osborne the reforming Chancellor. He really is cutting spending on non pension benefits to its lowest level relative to national income for about 30 years.
‘The changes to local Government financing and devolution are genuinely radical and could transform both the role of local Government and the UK’s fiscal architecture. The same is true of additional devolution to Wales and Northern Ireland. The commitment to consult on reforming school funding is long overdue.’