Chancellor Rishi Sunak is under pressure from MP’s to end stamp duty and council tax. Under the proposal, homeowners would no longer pay council tax and stamp duty would be abolished for primary residences. The proposal is expected to benefit 19 million households.
Instead of paying council tax, households would pay a proportional property tax which would equate to 0.48% of the value of the home. Upon analysis, it was found that 76% of households in England, would benefit from the proportional property tax, with each household saving on average £435 per year.
Whilst the majority of households would be saving under the proposed tax, others would see an increase in their tax bill. Households in London and the South East, where property is more expensive, would have to pay extra taxes. Initially the extra taxes would be capped at £1,200 per year.
When buying and selling a property, homeowners would pay an annual bill worth 0.48% of the property value, instead of paying stamp duty up front.
By replacing stamp duty and council tax it will ensure homes are taxed at the current value. It will also see transactions increase which in turn would boost the housing market and generate huge economic output.