Recent research from the Tax Payer’s Alliance has shown over a quarter of property buyers are hit with high stamp duty tax rates because of rising house prices. The campaign group are now calling on the government to end stamp duty as the percentage thresholds have not changed in years, despite the continuing increase in house prices.
The group describes stamp duty as an ‘unfair double tax’ which ‘stops young people buying a home and starting a family, discourages elderly people from downsizing and stops people moving to new places for new jobs.’
With many family homes priced between £250,000 and £500,000, homebuyers are expected to pay 3% of the property price in stamp duty. For example, for a property bought at £300,000 the stamp duty would be around £9,000. Research shows that 183,000 families pay the 3% (or even higher) rate every year and unsurprisingly, homebuyers in London and the South East are most affected. According to the Tax Payer’s Alliance, 48,419 homes were bought between 2012 and 2013 in the South East, all charged with 3%, 5% or 7% stamp duty.
Even homebuyers buying a home between £125,000 and £250,000 can’t avoid stamp duty and will have to pay 1% of the property price, still a considerable amount of money.
The Guardian’s Jonathan Portes thinks the government should replace stamp duty with a fairer tax. He believes abolishing stamp duty altogether will only cause house prices to rise even further or will force the government to cut spending elsewhere to make up for the shortfall. While the idea of scrapping stamp study sounds noble, there would need to be an alternative, albeit fairer, tax.