Stamp duty burden has shot up by 40% in a year
£27million a day taken by Treasury from the sale of homes
HOUSE buyers have been forced to stump up £10 billion in stamp duty in just one year, official figures reveal.
Driven by rising property prices the bill has jumped a staggering 40 per cent since last March, according to the Office for Budget Responsibility.
The figure is the equivalent of £27 million every day going into the Treasury’s coffers.
Spiralling house prices mean an increasing proportion of homebuyers now have to pay the tax, which used to apply only to the most expensive properties.
Nearly seven in ten homeowners now pay stamp duty when they move, compared with less than half in the late 1990s, separate figures from HM Revenue and Customs revealed this week,
The figures come amid growing calls to reform the tax, which experts warn is distorting Britain’s housing market because the crippling bill puts people off moving house.
The Institute for Fiscal Studies, the leading economic forecaster, says stamp duty is ‘a strong contender for the UK’s worst-designed tax’, and slams the way that it is charged as ‘perverse’.
It has been previously attacked by MPs including Dominic Raab, who described it as a ‘vindictive stealth tax on the middle classes’ that ‘warps the market’.
He added that the ‘ cliff edge’ nature of its thresholds was particularly absurd.
Clare Francis, from Moneysupermarket.com, said stamp duty is ‘ another obstacle hampering homeownership’. She added: ‘The thresholds [at which stamp duty is charged] have been held at the same levels for years now.
‘Rising property prices mean that an increasing number of firsttime buyers have to pay the 3 per cent rate. This isn’t right and it is time for the Government to reform this tax.’
And Paula Higgins, of the Homeowners’ Alliance campaign group, said property has become similar to tobacco and alcohol in that it is taxed in a punitive way.
She said: ‘It is a very sneaky tax. The Government has done nothing to rein it in.’ HMRC figures show nearly seven in ten people who bought a home over the past year paid stamp duty, a tax which used to hit only a minority.
Of the 1.2million homes bought for £40,000 or more between April 2013 and March 2014, 821,000 buyers – or 67 per cent – paid stamp duty. Many families decide it is cheaper to extend their current home, such as with a loft conversion or a kitchen extension, than to buy a new home because they want to avoid a hefty stamp duty bill.
As a result, the average homeowner now moves once every 22
‘London pays the lion’s share’
years, compared with once every eight years in the 1980s, according to recent research by Hometrack.
The OBR predicts homebuyers will be paying an eye-watering £70 billion in stamp duty on residential properties in the six years between 2013/14 and 2018/19.
This is more than the total amount of stamp duty paid by homebuyers over the last 21 years.
Until 1997, stamp duty was charged at just 1 per cent on all homes sold for £60,000 or more. In 1996/97 – the final tax year before the stamp duty regime was changed by Gordon Brown when he became Chancellor – less than 50 per cent of buyers paid the tax when buying a home.
HMRC’s latest regional analysis of which homebuyers pay stamp duty reveals how those in London pay the lion’s share of the tax.
Of the £4.65 billion paid in stamp duty in England in 2012-13, £2 billion was paid by people buying in London and £1 billion by those buying in the South East.
Just £50 million was paid in the North East, where the average home costs around £99,000 – a price at which no stamp duty would be incurred.
The average home in London costs £ 415,000, which brings a stamp duty bill of £12,450.
A Treasury spokesman said stamp duty is ‘an important source of Government revenue, raising several billion pounds each year to help pay for the essential services the Government provides and supports.’
She added: ‘Although the Government keeps all taxes under review, there are no plans to reform the stamp duty system.’