PKF Calls For Linkage Of UK Stamp Duty To Energy Efficiency

by Robert Lee, Tax-News.com, London

12 January 2007

Peter Penneycard, Director of Tax at PKF Accountants & business advisers, is calling for the Chancellor to boost the environment by linking the level of stamp duty land tax (SDLT) to the energy efficiency of all homes in the UK – both new and old.

The move would extend the announcement made in the Pre-Budget Report that new carbon-zero homes will be temporarily exempt from SDLT from some date in 2007. The introduction on 1 June 2007 of sellers’ Home Information Packs (HIPs), which require an Energy Performance Certificate, makes it possible to extend the incentive to owners of older properties, PKF said.

Penneycard commented:

“If the Chancellor is serious about the environment he needs to do more to tackle the root causes of carbon emissions and linking energy efficiency to tax breaks is one good way to do this."

“The government’s figures show that domestic energy consumption causes around 25% of national CO2 emissions. All HIPs are required to include an Energy Performance Certificate which rates a home’s efficiency but there is no real incentive for householders to try to improve it. Linking greater energy efficiency to a tax break would address that issue."

“A financial incentive for homeowners is paramount. The impact on climate change will only be significant if all home owners are encouraged to make their homes as environmentally efficient as possible.”

Penneycard continued:

“This incentive would be financially attractive to both the buyer and the seller. For the buyer it is simple: the amount of SDLT to pay would be less. But that also encourages sellers to make their home more environmentally friendly, reducing their energy bill and ultimately making their homes more marketable: lower stamp duty would be an important selling point.”

He concluded:

“Naturally, there will have to be different tiers of SDLT deduction depending on how much of a reduction has been achieved on each individual home. It will be harder for larger and older homes to convert in comparison to the smaller or newer homes, but all homes should have the incentive to work towards.”

Recommended