Britain’s stamp duty: the worst in the world?

British property buyers paid £13bn in stamp duty last year, an increase of 13pc on 2016, according to figures from HM Revenue & Customs. The rise has been fuelled by a series of reforms that increased the tax burden on property buyers, leading the system to be branded punitive, overly complicated and bloated with rules.

The announcement of a stamp duty exemption for first-time buyers by Philip Hammond, the Chancellor, in November is the latest change to increase the system’s complexity.

First the tax moved from a straightforward slab system to a tiered method. While bills were cut for some, it meant many ended up paying more – the top rate soared from 4pc to 15pc – but also made the calculations more opaque. Then came the introduction of the additional home surcharge, doubling bills in some cases.

But how do we compare with the rest of the world? British buyers may be surprised to learn that properties of a similar value abroad can attract a tax bill of more than double their own.

Research from EY, the accountancy firm, for Telegraph Money puts Britain towards the bottom of the list in terms of cost, although our system is one of the most complex. Georgina West of EY said: “Over the past seven years not only have the UK’s stamp duty rates been creeping up but the way in which it’s been charged on residential property has become increasingly complicated. While the UK has some of the highest property prices and the highest rates of stamp taxes in the world, it is not alone in this and there are other jurisdictions that charge similar rates at the top.”

Someone who buys a £300,000 house in England would pay an effective rate of 1.6pc. No tax would be due on the first £125,000, 2pc is due up to £250,000 and the remainder would be charged at 5pc – coming to a total of £5,000. Demonstrating the complexity of the system, in this scenario a first-time buyer would pay nothing and the buyer of a second property would pay £14,000.

It’s also true that in England we pay higher stamp duty than in many other advanced economies.

The EY research shows that in Japan, for example, on the same £300,000 house, a buyer would pay the equivalent of just £65 in duty.

Across the Irish Sea, rates of stamp duty are far lower – and much easier to comprehend. Buyers pay 1pc on homes valued below €1m (£875,000) and 2pc above. For a £300,000 home an Irish homebuyer would pay €3,400, or around £3,000.

Sweden and Singapore both have similar rates to Britain. In Singapore the rate is up to 3pc, while Sweden’s is 1.5pc.

Nimesh Shah, of accountants Blick Rothenberg, said: “For a second property purchase worth

Pay £65 in Japan or £5,000 in England. How much will property taxes cost you around the globe, asks Sam Meadows ‘The default will often be to apply the highest charge’

Sky high: stamp duty in Toronto is considerably more onerous than in the UK and in other parts of Canada, too