So, the mini budget has happened. “Mini” is perhaps not the word. Perhaps “giveaways” is a better synonym in this financial announcement, which was more of a juggernaut. Reductions in tax across the board it seems.
Now, everyone will expect me to comment on the changes to Stamp Duty Land Tax (SDLT). Firstly, people need to stop calling it Stamp Duty; Gordon Brown spent a long time coming up with the new name for this property tax 20 years ago. SDLT itself has never been liked as it is a tax on property, which is dear to the heart of every English person as in it is their own little castle. It was created to cover the cost of a war with France and never repealed.
Today, it was announced that first-time buyers pay no SDLT up to £425,000 on their first house purchase (provided they are buying below £625,000), and the nil rate is being doubled to £250,000. On the face of it, and according to the Chancellor himself, this will remove SDLT for 200,000 buyers more each year. The change is permanent, so no surge caused by the oddly called “stamp duty holiday” of 2020 through to September 2021.
My view is that this is clearly targeted at first time buyers, whereas the holiday measures of before helped everyone in a way who wanted to move. However, the thing is that those who wanted to move to save SDLT have done so. There were around 400,000 more transactions last year than usual. That means that those people are not going to be moving for a while so the level of activity was always going to cool over a period of time. The other thing to keep in mind is that the nil rate has been the same since 2006 so it was due a change anyway.
From my perspective, the most interesting change is not the SDLT change but the income tax change. With the scrapping of the top rate of tax and the bottom rate of tax being reduced by a penny, will that mean that the entrepreneurial spirit that Mr Kwarteng wanted us to harness will result in more people buying a property to rent out to provide for themselves a better life in their later years rather than going for the traditional pension? Will the new infrastructure and investment zones with massive tax incentives cause a need for housing in these areas? So many questions that I (nor anyone else) don’t have the answers to. What we can say for certain is that this was a bold announcement so let’s see how it goes. I for one will be watching with interest.