Heavy Lifting in Westminster, Removals and Political Power Plays!

The Property Tax Shake-Up: A Jolt to the Removals Industry?

Just like our removals crew sweating in this heat, Rachel Reeves is also feeling the pressure. She isn't lifting sofas, but rather attempting to shoulder the weight of fixing Britain's economy. The UK Treasury is reportedly considering a significant overhaul of the property tax system, with many prospective home buyers calling for the abolishment of stamp duty. This tax has existed in some form since the 1600s, but the modern version was introduced by Gordon Brown in 2003 when he was chancellor.

The mere discussion of a tax change can create market uncertainty and put potential buyers and sellers into a "wait-and-see" attitude. For removals companies, this would be a major concern, as fewer transactions mean fewer jobs.

So, how could this affect you? Whether you own or work for a relocation company, this could have a drastic effect on your day-to-day business. The proposed tax has the potential to slow down high-end moves because any home sold for over £500,000 would incur the new levy. Under these proposals, the tax would be charged when owner-occupiers sell homes, with rates set by the government and money collected by HMRC.

According to the Financial Reporter, only one in five property sales (20%) would be affected, compared to the 60% of sales affected under today's stamp duty rules. Clients currently selling their homes for around £500,000 may choose to postpone their move or face a tax of an unknown size. Sellers might also try to offset the tax by raising the price of their property, which could mean houses take longer to sell and create a lengthier period between the initial client contact and the day of the removal.

On the other hand, this would be positive news for first-time buyers and anyone buying below the threshold, as they would no longer be paying stamp duty. When the tax was paused from July 8, 2020, to June 30, 2021, for homes worth up to £500,000, overall property transactions in the UK increased by 19% compared to the previous 12 months. This policy led to peaks in activity, such as in November 2020, when more than 103,000 transactions took place! I think all crews certainly earned their wages that month! With first-time buyers trying to save money wherever they can, this could be a significant setback for larger removals firms that employ all of their staff and, consequently, have higher prices. In a bid to cut costs, potential clients may opt for cheaper "man and van" services.

The tax would likely be a single set rate for the whole of the UK, and it wouldn't reflect the significant difference in house prices between the North and South, particularly in London, where prices are even higher. Some critics have warned that the new levy would hit London families hard, as most London family homes are well over the threshold. This could be a politically explosive move for Labour in a Labour-run capital city and could mean intra-city moves happen less frequently, as people would simply choose to stay in their current homes rather than relocate.

In essence, while the tax aims to make the housing market fairer and more fluid by targeting the gains from rising property prices, Rachel Reeves should look elsewhere for revenue. She should certainly stick with the plan to abolish stamp duty to increase the frequency of moves. In turn, the government would gain money from VAT and corporation tax from removals companies, as well as tax on the items people buy for their new homes. After all, a new home means a new sofa and TV, right?