Did you know that the UK has the highest property taxes in the developed world? The government is squeezing home owners and businesses and showing no signs of relenting. New data has come to light which shows Britain is paying the highest rate of taxes on property purchases.
OECD (Organisation for Economic Co-operation and Development) show that when purchasing a property, taxes made up 12.7% of the total burden in 2014, the latest year for which data is available.
Since 2014, taxes have only increased with the likes of Stamp Duty changes in April 2016. This equates to taxes levied on property as a share of total taxation is higher in the UK than anywhere else in the developed world.
The average tax burden across the 35 OECD members is more than half the UK figure. Since 1965 the average has fallen from 8% to 5.6% meanwhile the UK has only gone up and sits, in a rather disturbing 1st place at 12.7%
Tax revenue in 2014 jumped from £69.8 billion in 2013 to £74.2 billion in 2015. Property taxes now make up the highest share of the tax burden for the last 35 years.
With stamp duty changes coming into effect in 2014, the increase in revenue was rather dramatic from 1.62% in 2011 to 2.4% in 2014. So much so, property taxes are now the equivalent of 4.1% of GDP in the UK, versus 3.9% GDP in France and 2.8% GDP in the USA.
We have also seen a shift in the way in which people want to work. Take for example the office, this is often the biggest outlay for a company but not anymore when millennials are making the decisions. We are seeing coworking companies rapidly open offices for multiple individuals and companies to work from, while sharing the actual cost.
These drastic increases in tax have had the opposite desired effect that George Osborne was looking for at the time. The housing market has slowed and the government have raised less than half as much money as the Treasury had predicted.
While many companies at the time were warning against the increases in tax and the negative impact it would have on the economy, the government chose not to listen and we can now say they got it wrong.
With tax burdens increasing, the only winners out of this are renters in the London Market, although very briefly. New figures show that more properties are on the market and this is down to a flurry of activity to beat the increase in stamp duty. Though this is only temporarily.