WHAT COULD DEVOLVING STAMP DUTY DO FOR LONDON?
The result of September’s Scottish referendum has opened up the prospect of many powers being devolved north of the border, and this had led to many English counties and cities arguing that they too should have more control over their affairs.
London is one such region, with a number of senior figures suggesting that the city should see more benefit from its tax contributions, including stamp duty.
This is something that both sides of the political debate appear to agree on. London Mayor Boris Johnson and Chancellor George Osborne have both been vocal in their support for the idea, while Labour’s potential mayoral candidate Diane Abbott and Shadow London Secretary Sadiq Khan have both backed the plans.
As the prospect of London retaining its stamp duty contributions gathers pace, we analyse what the potential benefits could be:
- It would bring London in line with other major cities
George Osborne has stated his intention to make London the “undisputed” global capital city within the next ten years. Of course, other cities share this ambition, and London will have to take on the likes of Beijing, Berlin and New York to achieve its goal.
New York currently retains 50% of all taxes contributed by its residents, with just 31% of its income provided by the US government. In contrast, London keeps hold of just 7% of its residents’ taxes, and relies on the government for nearly 75% of its funding.
- It would prevent stamp duty from being “a tax on London”
The stats surrounding stamp duty reveal the extent of London’s contribution when compared to other regions. For every pound raised by the Treasury from stamp duty, 40p comes from Londoners. The Evening Standard reported that Kensington & Chelsea paid twice as much stamp duty as the whole of Scotland last year.
With current stamp duty bands meaning the majority of London homeowners are pushed into the higher 4%, 5% and even 7% brackets, it is not difficult to see why politicians and homeowners alike would argue it is only fair that this money is reinvested into the capital.
- It is necessary for London to keep up with its housing demand
In a speech at the Conservative Party conference in September, Boris Johnson suggested that devolving stamp duty would provide London with the money needed to keep up with the demand for new housing.
Brandishing a brick at his audience to illustrate his point, he stressed the need for “reliable and continuous funding” that would “provide the new homes and choices hardworking Londoners deserve”.
The leader of Croydon council, Tony Newman, has even put his borough forward as a potential pilot location. He suggested that if London was able to show that devolving stamp duty could help one borough, it will be easier to persuade people that the idea can work on a larger scale.
- It would benefit the whole country
Even last year, David Cameron discussed his plans to make the country more economically balanced and make it less reliant on the financial muscle of London and the South East.
A report from the RSA (Royal Society for the encouragement of Arts, Manufactures and Commerce) City Growth Commission suggests that devolving the proceeds of taxes such as stamp duty could potentially boost the UK economy to the tune of £79 billion by 2030.
HOW MUCH STAMP DUTY ARE YOU PAYING?
From a London homeowner’s perspective, no matter where stamp duty goes, the way the tax is structured still means that many are paying a disproportionate amount compared to the rest of the UK.
Fiducia can help you mitigate your stamp duty contributions using efficient and legally compliant wealth management strategies. If you would like to discuss how this could benefit you, call our team on 01625 599 200 today.