The government’s emergency stamp duty cut means buyers in the UK now pay among the lowest in tax in Europe, even on a prime property.
British buyers are now paying just 1.93 per cent of a property’s value in tax compared to the European average of 4.53 per cent, a new study by accountancy network UHY showed today.
Since the stamp duty threshold was raised by chancellor Rishi Sunak in the Summer Budget, a homebuyer in the UK pays just $19,300 in stamp duty on a purchase of a home worth $1m, compared with a European average of $45,294.
The effective UK stamp duty rate was three per cent before the emergency cuts. Globally, buyers pay an average of 4.5 per cent on the purchase of a prime property.
“The newly announced cut to stamp duty is an encouraging sign for the housing market and should boost property purchases and the associated economic activity,” said Andrew Snowdon, head of tax at UHY Hacker Young.
“Cutting taxes on property purchases in the UK will hopefully improve confidence in the market, as property price growth has slowed since the Brexit referendum and been hit hard by coronavirus.”
However UK buyers of super-prime properties — worth $2m and up — pay most other countries, forking out 5.78 per cent in stamp duty compared to Italy’s 0.63 per cent and the US average of 0.39 per cent.
“For the government to charge over $100,000 on a $2m home is seen as harsh by many, especially if they are then charged the second home or overseas investor surcharges on top,” added Snowdon.
“While it’s great for working families to have zero stamp duty, when the housing market has shown little growth for several years the government should consider a cut to bring higher net worth investors back into the market in greater numbers. The UK benefits from their spending and investment.”