What was stamp duty in 1999

Taxes on property in the United Kingdom are already twice the European Union average when expressed in gross domestic product terms. Tax equals 3. Why is it necessary to raise business taxes further as a result of these proposals?

For example, in Portugal, public bodies, social housing and business reorganisations are exempt from stamp duty, full stop—never mind any increases. I dwell on this point because, if the Government are anxious to develop stamp duty as a tax, it would be useful to know whether they will apply it creatively. If they do not, they will have to contend with a large avoidance industry.

It is unusual for tax avoidance practitioners to declare their hand. However, the Financial Secretary will find that, as businesses seek ways around the tax increases, the avoidance industry will limber up, ready to turn property and land into companies with share capital—bearing in mind that there is only 0. The higher rate will be 3 per cent. Is that not a sure-fire way of relinquishing income in terms of business tax? Is the right hon.

Gentleman trying to tell the Committee that if Jack Investments Ltd. Gentleman's name as an example—has among its assets a factory and a green-field site, it will create a new company to take those two items from Jack Investments Ltd. That is totally ridiculous. Gentleman says that it is totally ridiculous, but perhaps he would like to explain that degree of ridicule to the authors of the London business school report, who advance the view that I have just explained.

Gentleman is entitled to his view, but I am certain that, in transactions of sufficient size, that type of avoidance mechanism will be used, particularly if the Government continue to increase the rate of stamp duty. Why should people pay tax unnecessarily if, to put it bluntly, there is a cheap way round it? In such a mechanism, property would be assets bought by a company. If they were then sold on to a new company, there would be a capital gains tax liability, which would be a cost on the company, so to save a few pounds companies might create a tax loss of many thousands of pounds.

To respond to the right hon. Gentleman's earlier point, I shall willingly take on the authors of that report—they do not seem to know what they are talking about. Gentleman did not consider the roll-over mechanisms in capital gains tax.

I am absolutely certain that people would take those into account. Conservative Members have performed sufficiently well in the debate to demonstrate that the Government must clearly answer many questions to justify their proposal.

The amendment would try to relieve business from that unnecessary tax. Before I end my remarks, may I apologise to you, Mr. Martin, and the Committee for not at the outset declaring my registrable business interests, which are in the Register of Members' Interests, in case anybody is concerned that they might have influenced what I had to say. Many points have already been made, so, in view of the hour, I shall keep my remarks brief.

Before I begin, I should declare that I have property interests that could possibly be affected by the amendment and the clause. They are declared in the Register of Members' Interests. It is worth noting that this is the third time in two years that the Government have increased stamp duty.

It is worth noting also that, for the bulk of the 18 years of Conservative government, stamp duty was fixed at 1 per cent. All objections to the tax have been multiplied many times because of its increase from 1 per cent.

I point that out in reply to the repeated interventions from the hon. Member sitting below the Gangway, who, I think represents Birmingham—. I am sitting below the Gangway, but the hon. Gentleman is confusing the name of the Member to whom he refers with that Member's constituency. I am a Member who represents Birmingham, but the hon. Gentleman who spoke is my hon. Friend the Member for St. Lady has made a stupid, cheap point. She knows perfectly well to whom I was referring. McKee of the British Property Federation has said that we shall hear a wide variety of debate in industry about whether a 3 per cent.

The property industry and all the institutions connected with that industry are entitled to ask the Government what their long-term strategy is for stamp duty. Unless they have some answers to those questions, they will draw their own conclusions. Like my hon. Friends, I shall quote a few facts and statistics from the Arthur Andersen report, compiled jointly with the London business school.

One of its most startling predictions was that, in the short term, a 1 per cent. In the longer term, additional factors would increase the reduction in GDP to some 0. I am pretty certain that not even the Government can tell the Committee tonight that the increase in stamp duty will have anything other than a deleterious economic effect.

It is worth noting how important the commercial property sector, which will he affected by this tax, is to the economy. It is worth approximately twice the entire gilt market. Although, in the mids, the value of United Kingdom equities was about 50 per cent.

That illustrates the relative decline in commercial property as an investment medium. There is no doubt about it: in an increasingly international world, our investing institutions that invest in properties will carefully monitor transaction costs and, if they find that transaction costs on property are significantly higher in the UK than those not just in the rest of Europe but in the rest of the world—as is the case even now, when total property transaction costs amount to about 10 per cent.

It may be worth considering how we compare with some other European countries. As I pointed out in an intervention, the UK has the highest property transaction costs in the European Union, amounting to some In Austria, such costs are about 1.

As I also said in my intervention, France has become so worried about the effect of high property transaction costs that it has cut its transaction tax drastically, from a huge The rate in Germany—perhaps our nearest major rival—is only 3. Therefore, I would severely caution the Government, if they have it in mind to increase stamp duty significantly in future years. Although, on the surface, it might appear to be a cheap tax to collect and a soft option—indeed, a very good candidate for Labour's stealth tax—the longer-term effect on business activity in the UK is likely to be significant.

There are other aspects in which stamp duty is significant. As hon. Friends have mentioned, it has a big effect on company liquidity, reflected in balance sheets. It has been argued tonight that it is wrong for companies to own their commercial property, but I believe that that is pretty dangerous advice coming from a bank manager who is talking and not even listening to my speech, because he knows that many companies—including some of our best companies, such as Marks and Spencer—own virtually all their shops, and they have found that, in the longer term, that benefited them greatly.

Gentleman suggest that that will continue to happen in the next two or three years? It all depends on whether the Government take us into the euro, on long-term and short-term interest rates, and on how rents respond to competition.

There are so many unknown factors that it is impossible to predict. I will not give any company generalised advice; I simply caution companies not to assume automatically that it will be cheaper to rent than to own property. That conclusion cannot necessarily be drawn. I recall that, last year, commercial property shares took a real hammering after the Government increased stamp duty, and I would expect the same thing to happen this year.

I would also expect the value of commercial property immediately to be written down in the balance sheets of most firms' property portfolios. Any investing company will require a high yield, and that will have to he reflected in either commercial property transaction prices or higher rents for trading companies. We cannot necessarily draw any particular conclusions.

Arthur Andersen has estimated that, even on conservative assumptions, an increase in stamp duty from 3 to 4 per cent. That shows that the clause will have a significant effect on business activity. The three increases in stamp duty have already had an effect. That has an effect on liquidity and on the ability of companies to borrow on the basis of the value of the commercial property held in their portfolio.

We should be looking to lower taxes for business. We want to stimulate business activity. We should not allow the cosy assumption that we shall harmonise taxes in Europe to lead us automatically to assume that taxes will be increased. This country should be a beacon in Europe—I hope that my hon. Whittingdale , who is on the Opposition Front Bench, is listening to this, because I am sure that it will be of interest to him—for lowering taxes, not increasing them. As I said yesterday, if we continue increasing taxes, as we are doing in this instance by raising stamp duty, we shall make more and more people unemployed.

Total unemployment in Europe is now We shall make Europe even more uncompetitive compared with the rest of the world. It is enshrined in the Basic Law that the maximum level of taxation in Hong Kong is 15 per cent. Every politician and every civil servant should be required to visit Hong Kong to see what a proper deregulated economy could do.

We should examine carefully what an increase in stamp duty will do. By far the largest amount of stamp duty is paid by the commercial sector. Friend the Member for Maldon and East Chelmsford is right to try to exempt commercial property.

If we do not recognise the property investment sector as an important international investment medium, we shall suddenly find that inward investment will decline. The previous Conservative Government were successful in bringing investment into the country. At one point, over a year period, we managed to attract a quarter of all the inward investment into the EU; that probably created 1 million jobs.

It would be a tragedy if this Government, with their tax-raising ideas, started to reverse that trend and increased unemployment. I do not want that to happen, and nor do my constituents.

When the Financial Secretary sums up, I hope that she will give us an idea of the effect of the burden on industry of the increase in stamp duty.

Much more importantly— I return to where I started—I ask her to give the property industry an indication of her long-term strategy for stamp duty so that it can plan its investments, which, by their very nature, are long term, and so that investors can plan with certainty on the basis of a degree of known facts.

We have had a long, but thorough, debate on the amendment, which would exclude from the increases in the higher rates of duty any transfers of property to which the uniform business rate applies. Clearly, the amendment's purpose is to introduce a stamp duty relief for commercial property.

Let me say at the outset that I do not believe that such a relief is called for, and I shall explain why. The commercial sector of the property market is in sound condition and should be well able to absorb these small increases without serious difficulties. Friends the Members for Halton Mr.

Twigg and for St. Bermingham pointed that out. According to the Investment Property Databank, the commercial property market has been strengthening in Returns from investment in property over the past three years—at 9.

Stamp duty is only one of the considerations involved in buying or leasing property; other economic factors, such as long-term interest rates and increases in capital values, are much more important. Whittingdale raised a number of issues and I shall deal with them in turn. He asked whether there was a secret agenda to harmonise stamp duty with Europe. The Conservative party knows a great deal about secret agendas, but this evening I shall not dwell—not at length, at any rate—on its misery.

United Kingdom rates are moderate; there is no European proposal to harmonise stamp duty, and there is certainly no secret agenda. Gentleman then said that rises will wound ordinary home owners in the south-east. May I point out to him that ordinary home owners—on whom we have concentrated this evening—are enjoying the lowest mortgage rates for 33 years? I know that that is very popular in the country.

He also spoke about something that is known as the slice system; I say that for the benefit of those Members who have just joined us in the Chamber. This is an example of the Opposition not fully costing their proposals. Gentleman protests, but he is one of the people who have argued for simplicity.

During our exchanges last week, I told him how much I admired his stance on deregulation. He has criticised Governments for not deregulating enough, but—as I had to point out to him last week, and have to point out to him again—the only problem is that he has been criticising the previous Conservative Government.

Let me make some progress, because I want to deal with what the hon. Gentleman said. Member for Maldon and East Chelmsford also said that we were weakening the competitiveness of the City of London; that is certainly not its view.

The Government are absolutely committed to maintaining a competitive environment in which the City can prosper. Aubyn raised a number of issues and, again, I shall deal with them in turn. He argued that a stamp duty increase would prevent local government from increasing taxes and asked whether the Government were carrying out a smash-and-grab raid. I note his enthusiasm for higher local taxes and I am sure that his proposal will be disseminated widely in his constituency. His argument is absolute nonsense.

Member for Guildford also said that the increase in duty on commercial property reduced the value of the Government's assets, outweighing the increase in tax revenue. Member for South-East Cornwall Mr. Breed rightly said that he could not see the point in that, but I am glad that the hon.

Member for Guildford is taking an interest in the public finances. How unlike the record of the Government whom he would have supported, had he been a Member of the House at the time. It needed this Government to—. The Financial Secretary has just played back the remark made by my hon.

Aubyn and by me about the estimated drop in the Government property portfolio as a result of these proposals. She went on to make a party political point. May I bring her back to that figure and ask whether she agrees with it?

If so, has any adjustment been made for that fact in the resource accounting procedures? No, I do not agree with it. I shall go on to discuss some of the points that the right hon. Gentleman made, because the Committee wants to hear about them. Member for Fareham Sir P. Lloyd and various others mentioned some of the points that were made in the report sponsored by the British Property Federation. It was a technical report and there is always great scope for different opinions, forecasts and analyses.

I do not agree with all the conclusions reached in it. It is getting rather late for some hon. Members, but I say with the greatest respect—as I used to say ins another capacity—that the hon. Gentleman should listen to what I say.

I was talking about his proposals for slab and slice, not the proposals in the amendment. I shall come a little later to the costs of that. Member for Fylde Mr. Jack said that, in his view, the Government had shifted the burden on to business. Both residential and commercial property deals will face exactly the same tax rate, which is why it is fair.

The Conservative party has been going on for weeks and weeks about the Government introducing complexity in the tax system; yet Conservatives seek to introduce further complexity. Gentleman gave us an interesting history lesson on how stamp duty was introduced. His speech amounted to an attack on stamp duty, but I note that, when he was a Treasury Minister—he held my post—he did nothing to abolish it.

It is no good the right hon. Gentleman telling the Chamber, "It was nothing to do with me, guy; I was only the Financial Secretary. No, I have already given way and I must make progress. Perhaps we could have less noise from the Treasury Bench. The only sound that I want to hear is from the Minister. That is the nicest thing that anyone has said to me all evening. What would the amendment do?

As I said, it would introduce considerable complexity into the administration of what is essentially a straightforward tax, the efficiency of which depends on a rapid turnover by the stamp office of a large number of documents. That was well pointed out in an excellent contribution by my hon. Friend the Member for Shipley Mr. Once again, the Opposition have proposed a measure that would lead to greater complexity, and has not been costed.

In answer to the hon. Member for Cotswold Mr. During the debate, the hon. Member for Maldon and East Chelmsford was asked whether he had costed the amendment, and he could not give an answer. The Opposition owe a duty to the Committee to say from where the money would come.

No wonder they completely mismanaged the public finances. Why should the voters listen to a party that no longer seems to know what it believes in on finance? Last summer, the shadow Chancellor denounced as "reckless" my right hon. This week, the shadow Chancellor promised that a Conservative Government "would adopt them". Those are not my words: I was quoting from the Daily Mail, so the Conservatives seem to have lost the confidence of another section of the press.

The amendment is neither desirable nor necessary. For the reasons I have given, I ask the Committee to reject it. Clause 99 introduces yet another rise in stamp duty rates in what the Prime Minister pretends is a tax-cutting Budget.

That follows two previous Labour Budgets which increased stamp duty rates. The Government were elected on a clear pledge not to raise taxes. The Committee should come to order. It is bad manners. Gentleman should be heard. When the Chancellor first introduced his stamp duty escalator in July , he gave house price stability as his reason for doing so. He said: I will not allow house prices to get out of control". That is the view of residential property estate agents.

I am grateful to you, Mr. Simon Tyler of Chase de Vere said: Most people will add the cost to their mortgages so I shouldn't think it will affect the property market too much.

When the Chancellor introduced this latest tax hike, he said that 96 per cent. However, it will affect a much wider section of society, because it will affect business—small business in particular. As the Association of British Insurers has said, the recent stamp duty increase has been presented as affecting those in more expensive housing. It also applies to commercial and industrial property where it bites at a low level.

The effect is to increase costs for many start-up businesses discouraging would-be entrepreneurs and investors backing them. The Institute of Directors has also criticised the rise. It will affect only a small proportion of domestic properties, but a much larger proportion of business properties.

The institute goes on to make the important point that transfers of goodwill and patents will also be affected. Moreover, a written answer from the Economic Secretary to the Treasury, referred to by my right hon.

Friend the Member for Fylde Mr. Jack — [Interruption. It is not good that the Chair should have to keep bringing the Committee to order; it is not fair on the hon. Member for Bognor Regis and Littlehampton Mr. The answer from the Financial Secretary's colleague, the Economic Secretary, reveals that three quarters of the tax revenue from the 3. The candle burns late into the night at the Treasury so that people can excise such unhelpful paragraphs.

Aubyn was right to point out that the 0. That will be crucial when the Government introduced resource accounting. It will not just mean a paper transaction; it will determine tax and spending plans. Friend was also right to point out that the increase in stamp duty is a tax on mobility. Twigg made a marvellous attack on the competence of Arthur Andersen, in connection with a report that he has not even read.

Perhaps Arthur Andersen should consult the hon. Gentleman and take advantage of his expertise when it next produces a report. Breed , a former bank manager, expressed concern about the amount of secured borrowing: he thinks that business should reduce it.

Well, he would, wouldn't he, being a former bank manager. My right hon. Friend the Member for Fareham Sir P. Lloyd is right to demand clarity on the Government's medium-term intentions on the rate of stamp duty, and my right hon. Friend the Member for Fylde is right to be suspicious of Governments who change taxes without saying why.

As my right hon. Friend pointed out, that must mean that the Government themselves believe the tax rise involved to be bad, and to be particularly bad for small businesses. Firms are genuinely concerned about the extra cost that the clause will impose on dynamic business.

It is yet another burden to add to the catalogue of additional burdens on business introduced by the Government since May What worries businesses particularly—as my hon.

Friend the Member for Cotswold Mr. Clifton-Brown and others have said—is where the future lies. What future stamp duty increases can we expect?

Will McKee, director-general of the British Property Federation, said last year: the real question is: where is the Chancellor going with stamp duty. Steve Mallen, head of research at Knight Frank, said: the shrewd investor"— and there are shrewd investors sitting opposite me— should assume stamp duty will continue to rise towards continental levels.

So what are the Government's intentions? The Minister should have given business some certainty and stability. She should have spelt out the Government's policy with regard to future stamp duty rates. Will the rates continue to rise, and, if so, to what level? Will they rise to the If stamp duty rates are not to continue to rise, why has not the Minister given the same guarantee that the Chancellor has given regarding corporation tax rates—that there will be no further increases for the remainder of this Parliament?

We have seen the rate increased from 1 to 2. As with all stealth tax rises, the effects of this are capricious and unplanned. The impact on residential properties is more severe— [Interruption. Like all stealth taxes, the increase's effects will be capricious and unplanned. It will have a more severe impact on residential property in the south-east than elsewhere in the United Kingdom, and will hurt small businesses disproportionately more than large ones.

If the Government are true to their rhetoric that the stamp duty increase is only about "cooling" the housing market, they should feel perfectly happy about accepting amendment No. If they cannot accept the amendment, I urge the Committee to demonstrate its opposition to just another stealth tax by voting for the amendment. There is a 30 day time limit from the date of execution for getting documents stamped. If documents are not presented to the Stamp Office with the correct amount of duty within this time limit, interest and perhaps also penalties - see below will be due.

The amount of interest due depends on the amount of the stamp duty and the lateness of the payment and a standard rate of interest initially set at 7. Interest will be charged on all documents presented late, regardless of whether or not the document was executed in the UK. Accordingly, in the case of a document executed outside the UK, interest will start to run 30 days after the date of execution and not 30 days after the document is brought into the UK.

Despite this change, execution or retention of documents offshore still remains a method of stamp duty mitigation. Ultimately, the decision as to whether to execute and retain offshore or not will be a commercial one that takes into the account the likelihood of the document having to be brought into the UK against the requirement to pay interest. There is no mitigation of interest charges and the full amount will always be payable.

Finally, interest will start to run 30 days after the date of execution regardless of whether the relevant document has been submitted to the Stamp Office for adjudication. Accordingly, unless it is anticipated that adjudication will be made within the 30 day period, it will be necessary to estimate the amount of stamp duty due and pay it at the time of submission of the document for adjudication so as to avoid interest accruing. Penalties will still apply when documents are presented late, that is within 30 days of execution if executed in the UK or for documents executed abroad within 30 days of first being brought into the UK.

If a penalty is due, the basic penalty regime is as follows:. The Stamp Office has the authority to reduce penalties if appropriate, taking account of any special mitigating circumstances. They have produced a table which provides details of the way in which they mitigate penalties. As mentioned above, no penalty will be charged on documents executed abroad provided that they are presented for stamping within 30 days of being brought into the U.

However, please remember that interest will apply from 30 days after execution of the document, wherever it is executed. Where an agreement for lease is presented for stamping at the same time as the lease, the Stamp Office consider the date of the lease as being the effective date in working out any penalty or interest.

Provided that the agreement for lease and the lease itself are presented together within 30 days of the date of the lease, and the correct amount of duty is paid, no penalty or interest is due. Before 1st October , penalties have been calculated differently on agreements for sale which are chargeable under section 59 Stamp Act eg business sale agreements and agreements for the sale of an equitable interest in property.

The new measures will bring such agreements in line with all other documents and in future they will be subject to the same penalty and interest rules. It is now less likely that clients would wish simply to take the decision not to stamp a section 59 Stamp Act agreement executed in the UK. SD rates:freehold conveyances and transfers - 28 Mar to 30 Nov For rates before , see the Stamp Taxes Manual appendix C pages Check what you need to do. To help us improve GOV. It will take only 2 minutes to fill in.

Cookies on GOV. UK We use some essential cookies to make this website work. Interpretation, Application and Care and Management. Interpretation Part Application Part Stamp duties under care and management of the Commissioners. Mode of recovering money received for duty. Moneys received for duty and not appropriated to be recoverable in High Court. Certain offences in relation to dies and stamps provided by the Commissioners to be offences. Proceedings for detection of forged dies, etc.

Proceedings for detection of stamps stolen or obtained fraudulently. Licensed person in possession of forged stamps to be presumed guilty until contrary is shown. Mode of proceeding when stamps are seized. Defacement of adhesive stamps.

Penalty for frauds in relation to duties. Sale of stamps. Power to grant licences to deal in stamps. Penalty for unauthorised dealing in stamps, etc. Provisions as to determination of a licence. Penalty for hawking stamps. Allowance for spoiled or misused stamps. Allowance for spoiled stamps. Allowance for misused stamps. Allowance, how to be made. Stamps not wanted may be repurchased by the Commissioners. Allowance for lost instruments.

Discontinuance of dies. Declarations, affidavits and oaths, how to be made. Mode of granting licences. Recovery of penalties, etc. Saving for enactments not repealed. Consequential amendments to other enactments. Continuity and construction of certain references to old and new law.

Short title. Stamp Duties on Instruments. Enactments Repealed or Revoked. Consequential Amendments. ACC Bank Act, Assurance Companies Act, Building Societies Act, Capital Acquisitions Tax Act, Central Bank Act, Companies Act, Conveyancing Act, Criminal Assets Bureau Act, Electricity Supply Act, Exchange Control Act, Family Law Act, Family Law Divorce Act, Finance Act, Finance Customs and Stamp Duties Act, Finance Miscellaneous Provisions Act, Finance No.

Health Insurance Act, Housing Act, Housing Finance Agency Act, Housing Miscellaneous Provisions Act, ICC Bank Act, Industrial and Provident Societies Acts, to Inland Revenue Regulation Act, Insurance Act, Investment Limited Partnerships Act, Land Act, Limited Partnerships Act, Local Government Financial Provisions Act, National Treasury Management Agency Act, Petroleum and Other Minerals Development Act, Postal and Telecommunications Services Act,