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Plans to suspend stamp duty land tax (SDLT) for homebuyers might result in the Treasury having to fund a tax shortfall of up to £7 billion, Grant Thornton has claimed.
The accountancy firm conceded that the reported move could help kick-start the ailing property market — and if it were only a temporary measure, homebuyers would need to pay SDLT at a later date, making the Treasury's paucity also short-term.
However, if reports of a complete suspension - rather than a postponement - of SDLT are to be believed then the Treasury would most likely recover lost receipts through alternative taxation: a difficult prospect with an upcoming election and the current squeeze on personal finances of UK individuals, said Grant Thornton's head of stamp taxes, Karen Campbell,
She remarked: 'The Government will want to protect its tax revenues, so it remains to be seen whether the proposal will mean homebuyers are completely exempt from paying SDLT or will have to pay it at a later stage.
'A possible option would be to introduce a nil-rate band of stamp duty for homes under £250,000 and introduce a top rate of 5% SDLT on homes over £1,000,000, while having a series of percentage rates of SDLT increasing in steps for homes between £250,000 and £1,000,000.
'This might enable the Treasury to recoup the losses from the nil-rate through the increased SDLT on more expensive properties.'
