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This article is from our 2006 news
archive, follow this link for current news |
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No reform for stamp duty
Double-digit house price growth increases buyer’s liablity
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In the Chancellors tenth Budget speech he increased the stamp duty exemption threshold by just £5,000 to £125,000 – less than the amount house prices have increased since his previous Budget.
Calls for wider reform of this unpopular tax have been ignored, meaning homebuyers will still have to pay 1 per cent on the full value of properties costing between £125,001 and £250,000; 3 per cent between £250,001 and £500,000; and 4 per cent thereafter.
The Government has faced intense lobbying to change stamp duty after years of double-digit house price growth has increased the number of buyers liable to pay the tax.
The Government made £5.5 billion from the tax in 2004-05 compared with just £1.8 billion in 1999-00, according to Halifax, and nearly half of first-time buyers are caught in the stamp-duty net, despite the fact that the Chancellor raised the threshold from £60,000 to £120,000 last year.
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In 2006 the cost of the average home was approaching £200,000, the tax means most families face a bill of nearly £2,000 for moving while in London the average cost is £280,000 meaning stamp duty of more than £8,000.
Stamp duty also distorts the housing markets because of the steep increases in the rates payable at £250,000 and £500,000.
Data from the ODPM (2006) shows that the average price of properties
bought by first time buyers was £135,742, so raising the threshold for stamp duty by just a smidgeon to £125,000 will do little to help the majority who are struggling to get a foot on the housing ladder.
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Levels and bases of, and reliefs from, taxation are subject to change.
Article date: May 2006
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