It is hard to describe George Osborne’s address to Parliament in such terms – but there were some important points of which to take note.
Heavily trailed in advance of today’s statement, the Chancellor announced significant changes to personal allowances, a reduction in the highest rate of income tax and the introduction of a new marginal rate of Stamp Duty Land Tax (SDLT).
However, once again there was no recognition of the barriers to investment presented by the current system of property taxation.
The UK economy has suffered its most damaging recession for decades, the Government has (and continues) to cut public spending while encouraging private sector investment to take its place. In fact Mr Osborne described today’s statement as “unashamedly backing business”
The Chancellor has repeatedly declared his commitment to small businesses, and the desire to see small and medium size enterprises play a much greater role in economic recovery. Despite this, small enterprises specialising in residential housing (AKA landlords) remain unable to release gains from the sale of their assets to invest in growing their business.
Today the Chancellor unveiled more tinkering at the edges of SDLT rules, in pursuit of the perfectly reasonable objective of reducing tax avoidance by rich individuals. This year Mr Osborne has introduced two new marginal rates for property purchases in excess of £2m – 7 per cent for purchases by individuals and a whopping 15 per cent for companies.
The Government is of course justified in wanting to stop wealthy individuals exploiting loopholes to avoid paying their dues, but the Treasury should take care not to ignore the impact that measures will have on legitimate companies which buy property to let by way of business for whom an additional 15 per cent at point of purchase will drastically influence investment decisions.
Meanwhile calls for a comprehensive review of Stamp Duty continue to fall on deaf ears. It is clear from the, now annual, incentives, payment-holidays and rate changes that the successive governments recognise that SDLT is broken yet their reluctance to go back to the drawing board remains.
HM Treasury needs to realise that SDLT is about more than just mansion taxes and the wealthy, it affects investment and business and is not fit for purpose.
This is a missed opportunity to stimulate more investment and encourage growth in the housing market.
For more on the Budget 2012, visit the NLA Website