PER­SONAL AC­COUNT

The Daily Telegraph - Your Money - - FRONT PAGE - Marc Sid­well

It’s time to slash stamp duty on houses – and then scrap it al­to­gether

As au­tumn draws in, bring­ing a chill to the early morn­ing air, it pays to hold on es­pe­cially tight to your money. With party con­fer­ence sea­son im­mi­nent, politi­cians are more ea­ger than usual for ini­tia­tives on which to spend our taxes – and dis­tress­ingly short on ideas about how to limit their spend­ing.

The Chan­cel­lor’s au­tumn Bud­get, still with­out an of­fi­cial date, is also lurk­ing men­ac­ingly in the back­ground. So far there have been threats of a new squeeze on the own­ers of sec­ond homes, calls for the re­moval of in­her­i­tance tax relief for Aim shares and fears of an even smaller pen­sion an­nual al­lowance (see fac­ing page).

Adding to the sea­sonal mood, this week saw the pub­li­ca­tion of a re­port from the In­sti­tute for Pub­lic Pol­icy Re­search (IPPR), drawn up by a com­mit­tee in­clud­ing the Arch­bishop of Can­ter­bury, Justin Welby. The re­port called for a huge in­crease in in­her­i­tance tax and for higher taxes on both div­i­dends and cap­i­tal gains.

Ev­ery­one can agree that there’s room for na­tional re­form, and Brexit presents a great op­por­tu­nity to think in fresh ways. But the tax-and-spend mind­set glides over rad­i­cal poli­cies that can both re­spect your sav­ings and make a real dif­fer­ence up and down the coun­try.

As a case in point, take the ab­surd state of stamp duty. To its credit, the IPPR re­port ac­knowl­edges that “stamp duty adds un­de­sir­able fric­tion to the prop­erty mar­ket and makes home own­er­ship more ex­pen­sive, es­pe­cially for those on low in­comes”. Bizarrely, it then fo­cuses on a con­tro­ver­sial land value tax to re­place busi­ness rates, ob­serv­ing only that if this in­no­va­tion were suc­cess­ful it would “pro­vide use­ful lessons for the wider re­form of coun­cil tax and stamp duty which are plainly nec­es­sary”.

Here’s a bet­ter idea: the Chan­cel­lor has the op­por­tu­nity this au­tumn not to ex­per­i­ment with ex­otic new taxes or raise ex­ist­ing ones. He doesn’t have to wait to learn use­ful lessons be­fore fix­ing stamp duty. All he has to do is cut it in half and un­veil a plan to end it al­to­gether in the near fu­ture.

Ac­cord­ing to a re­cent re­port by the Lon­don School of Eco­nom­ics (LSE) cited by the IPPR com­mis­sion, in the past 20 years stamp duty has more than quadru­pled on a me­dian-priced home in Eng­land. In Lon­don it has gone up by a fac­tor of more than 12. The same study showed how the cost of stamp duty stopped many older home­own­ers from down­siz­ing – a trend that starves younger fam­i­lies of suit­able hous­ing stock. Stamp duty is now the sec­ond most im­por­tant in­flu­ence on older in­di­vid­u­als de­cid­ing whether or not to down­size. Ten years ago, it barely reg­is­tered.

With last-time buy­ers grid­locked, there has al­ready been a pro­posal to give them a spe­cial stamp duty exemption. A YouGov study last month sug­gested that such an exemption could free up mil­lions of homes for grow­ing fam­i­lies.

But we don’t need fur­ther com­pli­ca­tions to stamp duty. The Tele­graph Money

The Arch­bishop of Can­ter­bury, the Most Rev Justin Welby, has called for higher taxes

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