Have You Borrowed To Pay Tax?

[Marina]

When Stamp Duty went up shortly after Gordon Brown got into No. 11 I was sure it would bring the market to a halt.

Whenever I had moved up until then stamp duty might have been say 1% of 100k i.e. a grand. I would always have that sort of money to hand and it would get lumped into the pot and become part of the costs of the move.

When stamp duty went to 3% above 250k I thought - wonder how many people have 7.5k sitting in their pocket waiting to throw into Gordon Brown's pocket? I assume most people selling a 250k house have simply taken it in their stride and feel that it means they got 7.5k less 'profit' from the house they have sold.

But, what it means for the vast majority of people in that situation, is that they take on a mortgage which is 7.5k bigger than it would have been if they did not have to give Gordon his slice. They have borrowed money, probably over 25 years, to pay tax!

I think about people round here, working their way up the ladder from a 250k house to a 500k house (nice, juicy 20k for Gordon) and, by the time they are 45 or 50 and have their 500k house - maybe as much as 40k of their mortgage has been taken on (in chunks - a bit more each time they move) to pay Stamp Duty.

Paying tax to feed an army of unproductive public servants is one thing - borrowing money to pay tax is another. It perfectly illustrates the mass stupidity of people. I'd love to know how much in total has been borrowed collectively over the last 7 or 8 years to pay tax.

First he robs your pension, then you end up borrowing 30 or 40k to pay Stamp Duty. The man is a genius.

[ck1]

When Stamp Duty went up shortly after Gordon Brown got into No. 11 I was sure it would bring the market to a halt.

Whenever I had moved up until then stamp duty might have been say 1% of 100k i.e. a grand. I would always have that sort of money to hand and it would get lumped into the pot and become part of the costs of the move.

When stamp duty went to 3% above 250k I thought - wonder how many people have 7.5k sitting in their pocket waiting to throw into Gordon Brown's pocket? I assume most people selling a 250k house have simply taken it in their stride and feel that it means they got 7.5k less 'profit' from the house they have sold.

But, what it means for the vast majority of people in that situation, is that they take on a mortgage which is 7.5k bigger than it would have been if they did not have to give Gordon his slice. They have borrowed money, probably over 25 years, to pay tax!

I think about people round here, working their way up the ladder from a 250k house to a 500k house (nice, juicy 20k for Gordon) and, by the time they are 45 or 50 and have their 500k house - maybe as much as 40k of their mortgage has been taken on (in chunks - a bit more each time they move) to pay Stamp Duty.

Paying tax to feed an army of unproductive public servants is one thing - borrowing money to pay tax is another. It perfectly illustrates the mass stupidity of people. I'd love to know how much in total has been borrowed collectively over the last 7 or 8 years to pay tax.

First he robs your pension, then you end up borrowing 30 or 40k to pay Stamp Duty. The man is a genius.

[Mushroom]

When Stamp Duty went up shortly after Gordon Brown got into No. 11 I was sure it would bring the market to a halt.

Whenever I had moved up until then stamp duty might have been say 1% of 100k i.e. a grand. I would always have that sort of money to hand and it would get lumped into the pot and become part of the costs of the move.

When stamp duty went to 3% above 250k I thought - wonder how many people have 7.5k sitting in their pocket waiting to throw into Gordon Brown's pocket? I assume most people selling a 250k house have simply taken it in their stride and feel that it means they got 7.5k less 'profit' from the house they have sold.

But, what it means for the vast majority of people in that situation, is that they take on a mortgage which is 7.5k bigger than it would have been if they did not have to give Gordon his slice. They have borrowed money, probably over 25 years, to pay tax!

I think about people round here, working their way up the ladder from a 250k house to a 500k house (nice, juicy 20k for Gordon) and, by the time they are 45 or 50 and have their 500k house - maybe as much as 40k of their mortgage has been taken on (in chunks - a bit more each time they move) to pay Stamp Duty.

Paying tax to feed an army of unproductive public servants is one thing - borrowing money to pay tax is another. It perfectly illustrates the mass stupidity of people. I'd love to know how much in total has been borrowed collectively over the last 7 or 8 years to pay tax.

First he robs your pension, then you end up borrowing 30 or 40k to pay Stamp Duty. The man is a genius.

Well in some ways he was. I suspect to many the word Duty doesn't carry quite the same meaning as Tax.

Stamp Duty implies some sort of administrative charge, which in part it presumably is, but logically that would be the same regardless of a property's selling price.

"Grin and bear (sorry!) it" is probably most people's view. Anyways don't matter me house is gonna go up in't it.

[Marina]

Well in some ways he was. I suspect to many the word Duty doesn't carry quite the same meaning as Tax.

Stamp Duty implies some sort of administrative charge, which in part it presumably is, but logically that would be the same regardless of a property's selling price.

"Grin and bear (sorry!) it" is probably most people's view. Anyways don't matter me house is gonna go up in't it.

Absolutely, that's it in a nutshell. But if you asked the average homeowner round here with a 350k house - are you happy that your mortgage is 10k bigger than it needs to be - because you paid 10k stamp duty when you bought your house i.e. you borrowed 10k to pay a tax - I think most people would give you a blank look.

[Fancypants]

I think most people would give you a blank look.

but that is a look that we are all too familiar with receiving, no?

[Mushroom]

Absolutely, that's it in a nutshell. But if you asked the average homeowner round here with a 350k house - are you happy that your mortgage is 10k bigger than it needs to be - because you paid 10k stamp duty when you bought your house i.e. you borrowed 10k to pay a tax - I think most people would give you a blank look.

This does beg the question as to whether people's professional advisors ever explain that.

As for the lenders? Can't see them complaining that the Chancellor increases their business.

[Marina]

This does beg the question as to whether people's professional advisors ever explain that.

As for the lenders? Can't see them complaining that the Chancellor increases their business.

No, professional advisors never mention it. No-one does. It's one of those things that is so obvious it does not need mentioning. You pay the Stamp Duty out of the profits you have already made - I am convinced it does not occur to 99% of the population that they actually borrow the money to pay the Stamp Duty.

[xian]

very very true. But I reckon many understand it, but simply don't bother, since it's unavoidable, and if you want to move, you have to bite the bullet.

Also, I wonder what the fiscal drag effect is on SD and house prices? Yes, GB changed the threshold for 1% from 60k to 120k, but not many places can even be bought for 120k now.

I reckon fiscal drag on relatively unchanged stamp duty in the HPI climate over the last 10 years could be worth even more to the treasury....

[Mushroom]

No, professional advisors never mention it. No-one does. It's one of those things that is so obvious it does not need mentioning. You pay the Stamp Duty out of the profits you have already made - I am convinced it does not occur to 99% of the population that they actually borrow the money to pay the Stamp Duty.

Like you I suspect, I've only paid Stamp Duty at the previous reasonable rate and always paid it within the solicitor's bill from non borrowed money.

There you go, more madness.

[FRUSTRATED]

When Stamp Duty went up shortly after Gordon Brown got into No. 11 I was sure it would bring the market to a halt.

Whenever I had moved up until then stamp duty might have been say 1% of 100k i.e. a grand. I would always have that sort of money to hand and it would get lumped into the pot and become part of the costs of the move.

When stamp duty went to 3% above 250k I thought - wonder how many people have 7.5k sitting in their pocket waiting to throw into Gordon Brown's pocket? I assume most people selling a 250k house have simply taken it in their stride and feel that it means they got 7.5k less 'profit' from the house they have sold.

But, what it means for the vast majority of people in that situation, is that they take on a mortgage which is 7.5k bigger than it would have been if they did not have to give Gordon his slice. They have borrowed money, probably over 25 years, to pay tax!

I think about people round here, working their way up the ladder from a 250k house to a 500k house (nice, juicy 20k for Gordon) and, by the time they are 45 or 50 and have their 500k house - maybe as much as 40k of their mortgage has been taken on (in chunks - a bit more each time they move) to pay Stamp Duty.

Paying tax to feed an army of unproductive public servants is one thing - borrowing money to pay tax is another. It perfectly illustrates the mass stupidity of people. I'd love to know how much in total has been borrowed collectively over the last 7 or 8 years to pay tax.

First he robs your pension, then you end up borrowing 30 or 40k to pay Stamp Duty. The man is a genius.

Did you konw that solicitors now charge extra (£75 + vat) for completing the stamp duty form in addition to the general legal costs, they assume we are unable to fill in the 5-6 page document, believe me its easy and you can get help from the appropriate Govt dept. Also solicitors "need" the stamp duty "on completion" but actually the revenue give you 30 days from completion to pay up. Nice credit balances for our legal boys