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January 12, 2017
Stamp Duty Land Tax – A Short History Since 1959
Stamp Duty Land Tax (SDLT) replaced Stamp Duty as the Duty Tax paid on property transactions in December 2003, when residential and non-residential properties where also separated. In the forty years preceding Gordon Brown’s elevation to Chancellor of the Exchequer, the top rate had never ranged outside 1.0%-2.0%. Within just over 3 years of his appointment, the top rate had risen to 4.0%. A decade later under George Osborne, this increased up to 12.0% – with a further 3.0% surcharge for buy-to-let properties and second homes. This means that the stamp duty paid on a second home worth £10m has risen from just £100,000 (1.0%) in 1997 to £1,413,750 (14.1%) today, a rise of more than 1300% in less than two decades.In 1963, then Chancellor Reginald Maudling cut the top rate from 2.0% to 1.0% for properties worth over £6,000. The lower end of this band increased to £7,000 in 1967 under Roy Jenkins, and £15,000 in 1972 under Anthony Barber. Denis Healey re-introduced a top rate of 2.0% for properties worth over £30,000 in his first year as Chancellor in 1974, which rose under Geoffrey Howe to £35,000 in 1980 and £40,000 in 1982. This band was abolished by Nigel Lawson in his first budget in 1984, returning the top rate to 1.0% for properties worth over £30,000. It remained at this level until 1993, aside from a period from December 1991 to August 1992 when the nil rate was raised to £250,000. In March 1993, the top band rose again to £60,000 – where it remained untouched until Labour’s reelection.Two months into his tenure in 1997 Gordon Brown re-introduced the 2.0% band, this time for properties worth over £500,000, and raised this further to 3.0% in March 1998, 3.5% in March 1999, and 4.0% in March 2000. After these rises, which had taken the top rate above 2.0% for the first time in history, the upper band was untouched for the remainder of his tenure, although the price ceiling of the nil rate band was raised from £60,000 to £120,000 in 2005 and then £125,000 in 2006 – where it has remained since. Over the course of his tenure the top rate had risen from 1.0% to 4.0%, all of which occurred in his first four years.
In 2011, George Osborne became the first Conservative chancellor to raise Stamp Duty rates in over half a century by introduced a new top rate of 5.0% on properties worth over £1,000,000. He repeated the feet the following year by creating another band for properties worth £2,000,000, which would pay 7.0%. In the Autumn Statement of 2014 the old “slab” system was replaced with a new graded system, and the top rate paid rose to 12.0% for the portion of the property worth over £1,500,000. In April 2016, a further surcharge of 3.0% was added to buy-to-let property and second homes. This leaves the total effective rate on second homes at up to 15.0% for the highest bracket.