A change in UK stamp duty

Earlier this year, I posted about the step function tax on buying a house in the UK.  (See here)  The media referred to it as a "block" tax, but mathematicians would tend to think of it as a discontinuous step function on the integer line.

Happily, it was announced that this tax would cease from 00:01 today, to be replaced by a piecewise linear tax on the cost of a house.  So, instead of a tax on the whole price of a house, which meant that the tax on  a £250,000 house was £2500, and if the property costs one pound more, £250,001, the tax was  £7500.03p, there are a series of thresholds, where the tax rate changes, but only for the price in excess of that threshold.

I don't think that the government reads my blogs, but numerous other people have protested at the step function tax regime.  So I think that it is their influence which has swayed the government - that, and the prospect of an election in May 2015.  As this change was announced yesterday, today's media are full of reports of the effect.  One could plot the tax (stamp duty) paid as the dependent variable against house price under the old and new regimes, and find where the lines cross, but most of the media have simply opted to say that if the house costs less than £937,500, the tax will now be less than under the old scheme.  Well over 95% of houses in the UK sell for under that price, so lots of people will rejoice. 

There is an online calculator of stamp duty here.

I referred to the earlier scheme as a bit of game theory.  That no longer applies to the same extent.


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