The debate over extending the deadline
As we look forward to the 2021 Spring Budget on Wednesday 3rd March, the Chancellor has a number of options to consider regarding the Stamp Duty Holiday. These include:
- Extending the holiday
- Removing the tax completely for properties under £500,000
- Bringing the tax entirely back in
Some argue that taxation must be kept to a minimum by extending the holiday further. Many businesses just cannot afford a hike in stamp duty taxation without having to make more employees redundant, and more redundancies would have wide-reaching consequences for the UK economy.
On the other hand, some want the Chancellor to remove the tax entirely for properties under £500,000. This move would help to:
- Protect those who are most financially vulnerable
- Make sure that property developers still have sufficient income
- Ensure that the property market doesn’t slump completely
A permanent removal of the stamp duty tax goes against the government’s political ideology, however. They will be wary to not shoot themselves in the foot and contradict any past statements about economic preferences.
In addition, permanently removing the tax for properties under £500,000 would greatly reduce the Treasury’s financial intake. This would result in underfunding and underspending for many other sectors (including the property market) across the UK. Once again, the repercussions of this could be severe.
The Chancellor’s third option, extending the tax holiday further, is viewed by some as an unsustainable approach. These people argue that the stamp duty tax will have to be reintroduced eventually, because the tax holiday is costing the Treasury too much money. As many employees and businesses have already returned to the workplace, now seems as good a time as any to reintroduce the tax.
Rishi Sunak must consider all of these valid points when deciding whether to extend the stamp duty holiday deadline.