Budget 2008: Stamp duty must be revolutionised
Thursday, 06 Mar 2008 11:36
Budget 2008: Darling pushed for stamp duty
A shake-up of stamp duty thresholds is needed if the UK's property market is to continue to grow, and avoid any potential moderation in prices, the chancellor is being told in the run-up to the Budget.
Figures from Halifax reveal the Treasury's stamp duty revenue has doubled over the past five years from £2.7 billion in 2001/02 to £6.4 billion in 2006/07.
Currently the average home buyer pays seven per cent of their annual income in stamp duty – with the average bill standing at £1,971 in 2007. However in London and the south-east stamp duty stood at over 20 per cent of income.
Robert Bryant-Pearson, chief executive of Allied Surveyors, is now calling on Alistair Darling to overhaul the stamp duty system next week in his début budget.
"We need a radical shake up if the market is going to flourish at all this year," he said.
"I would urge the government to revolutionise the system by scrapping existing threshold triggers.
"It is ridiculous that currently in a sale at £250,000, the purchaser pays £2,500 stamp duty but at £250,001, this rockets to £7,500 because the next three per cent band applies, not just the part above £250,000 but to the entire price."
Mr Bryant-Pearson went on to suggest a system whereby the first £200,000 of any property sale should be free of duty and then a single fixed rate would be payable, but only on the amount over £200,000.
“In the forthcoming budget the chancellor must correct this untenable levy," he concluded.
Properties worth under £125,000 current face no stamp duty, while those prices £125,001 to £250,000 face a one per cent fee. Three per cent is charged for homes between £250,001 and £500,000 and a four per cent stamp duty levy hits homes worth over £500,001.
The government has come under pressure as the thresholds have not increased with the massive house price rises of the last decade.
If they had increased with house price inflation the £125,000 threshold would now be £191,000, while the £250,000 and £500,000 thresholds would be £720,000 and £1.44 million.