Scotland set to abolish 'slab tax'

by Ed Bowsher on 08 June 2012  |  21 comments
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The Scottish government is consulting on a plan to make stamp duty a fairer tax. Let's hope that the Westminster follows Holyrood's lead and abolishes the 'slab tax.'

Stamp duty on property sales is possibly the most stupid tax in the UK. I don’t object to taxing a property sale, but I strongly object to the current ‘slab tax’ structure.

So if a residential property is sold for £249,000, stamp duty is charged at 1% on the whole value of the property. So you’d pay £2,490 in tax.

But if a property is sold for £251,000, stamp duty is charged at 3% on the whole value of the property. So you’d pay £7,530 in tax. This makes no sense at all.

Here are all the thresholds for this crazy tax:

It would make much more sense to structure stamp duty like income tax.

Say a house was sold for £400,000. Stamp duty could be levied like this:

£0 to £100,000: 0%

£100,001 to £200,000: 2%

£200,000+: 3%

In this example you’d end up paying £8000 in tax.

Scottish consultation

I’ve criticised the ‘slab tax’ before on lovemoney.com, so I’m delighted to see reports that the Scottish government is now consulting on plans to abolish stamp duty north of the border.

If the Scottish government follows through on its plans, stamp duty will be abolished in April 2015 and replaced by a fairer Land and Buildings Transactions Tax. Under the proposals, no tax will be charged on properties worth up to £170,000 and there will be tax cut for all properties sold for up to £325,000.

The Scottish government can make these changes as some extra tax-raising powers were devolved to Scotland this year. I just hope that the Chancellor has noticed this very sensible Scottish move.

End the slab tax now!

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