Badenoch challenge
Kemi Badenoch’s carefully crafted tax policies have put Rachel Reeves, the Chancellor of the Exchequer, in a tricky position. If Reeves puts up the rates of Stamp Duty Land Tax in her Budget on 26th November, she will make the housing crisis worse, so the only sensible solution is to pre-empt the Conservatives and lower the rates.
In her speech at the Conservative Party Conference in Manchester last week, Kemi Badenoch announced that the next Conservative Government would abolish Stamp Duty Land Tax (SDLT) on new homes when it came to power.
Kemi Badenoch told the Tory Conference in Manchester that the tax rates on buying a new home in England and Northern Ireland were now prohibitive. She said she had looked at the rates and the thresholds and said that the only sensible option was to abolish the tax.
The tax rates she said stopped young professionals from buying their first home, from hard working couples buying a bigger home to accommodate a family and for pensioners from downsizing and allowing their children to buy larger homes as they required.
SDLT is payable when you buy a home in England and Northern Ireland.
It starts to apply when you buy a property that costs:
£125,000 for residential properties
£300,000 for first time buyers buying a residential property worth £500,00 or less
The rates you pay increases with the value of your property.
Up to £125,000 the rate is zero (unless it is your first property)
The next £125,000 (the portion from £125,001 to £250,000) is 2%
The next £675,000 (the portion from £250,000 to £1.5 million) 10%
The remaining amount (the portion above £1.5 million) 12%
If you are a first-time buyer, the portion from £300,001 to £500,000 is taxed at 5%. If the price is above £500,000 the first time buyer’s relief is withdrawn.
If it is a second home, you will pay an additional 5% of tax, and if you are a non-UK resident, you will pay a surcharge of 2% with a maximum rate of 19% above £1.5 million.
If the housing market is stagnant, tax revenue falls. The Treasury needs a buoyant market to raise taxes, even at lower rates - no activity means no tax, more activity means more tax, even if SDLT is at lower rates.
Kemi Badenoch said ‘The tax burden is so high it is making Britain poorer because business is giving up, business is leaving,’ and from what I can see, a lot of the young couples who would struggle to upsize their homes to accommodate a family are leaving the country with their bosses.
Kemi Badenoch’s carefully crafted tax policies put Rachel Reeves, the Chancellor of the Exchequer, in a tricky position.
It is widely reported that the property market is in crisis. An estate agent in London said that purchases are down by 80% this year compared to before Covid.
But it is not just in super prime London. My neighbour in Gloucestershire had a buyer last year but, for personal reasons, declined it and now cannot get a viewing, let alone a buyer.
This could be an opportunity for proactive strategic networking, gathering with other professionals to respond to and record a case study.
An estate agent could gather a
Mortgage broker
Interior Designer
Immigration/Emigration specialist
Buying Agent
Real estate lawyer
Each would respond to what they would do to benefit Jack and Jill, our fictitious clients, in our case study of the week. The recording would take 30 minutes to prepare and 30 minutes to record. It can then be used in multiple ways
Strategic networking - to smash the 80:20 rule
Strategic cross-referral of business - to smash the silo mentality in many firms
Building loyalty and trust with clients - for repeat business and referrals, and
Strategic sponsorship - to appeal directly to prospective clients
This is Client Mapping, which has been called a Client First Revolution because it focuses on the needs of the client and not the skill set of the professional.
Caroline’s Club makes strategic business development easy, effective and efficient. It is supported by a digital platform where professionals can create profiles to which their podcasts and case studies can be linked, stored, accessed and shared whenever the opportunity arises. Professionals can also use the directory to find professionals they would like to network with.
If you would like to share this article and the case study with your colleagues for strategic cross-referral of business or with your network for strategic networking, use the ‘Share’ buttons and get in touch with Caroline’s Club to find out more by using the ‘Leave a Message’ feature.
Massive changes are occurring within the professional services industry. Fewer graduates are being taken on as AI takes over their jobs. However, AI cannot take over business development, which is where graduates can learn to win business for the firm while improving loyalty and trust with clients—we will explore this in more detail next week.