An estate agent has called for a new 2% tier of Stamp Duty to be introduced to cut taxes for purchasers of properties between £250,000 and £375,000.
Currently Stamp Duty Land Tax triples from 1% to 3% at purchases of £250,000.
Paul Beresford, of Essex firm Beresfords, said this was “plainly wrong”.
He made the call after Stamp Duty once again fell under the spotlight, with ministers coming under pressure to reform the tax and increase the number of transactions.
New calculations say that more than a quarter of home buyers are now paying Stamp Duty Land Tax at the higher rates of 3% – shelling out at least £7,500.
The research, by the TaxPayers’ Alliance, is underpinning the pressure group’s new Stamp Out Stamp Duty campaign.
It estimates that the tax raised £4bn for the Treasury in 2012/2013, most of which was collected at rates of 3% or more.
Using a mixture of Land Registry and HMRC data, the research says that in England and Wales some 723,829 homes were bought in 2012/13, with 182,692 purchasers being liable for Stamp Duty at 3% or more.
Stamp Duty rates of 3% or more were imposed on 65% of all residential transactions in London, 39% in the rest of the South-East, 27% in the East of England, 24% in the South-West, 12% in the West Midlands and 10% in the East Midlands, according to the research.
In the North, the figures were lower at 9% in the North-West and in Yorkshire and the Humber, and 6% in the North-East. Around 8% of Welsh property purchasers paid Stamp Duty at 3%-plus.
While the research seems to have been based on a slightly unsatisfactory mix of data – as EAT readers know, the Land Registry house price monthly indices vary markedly from the Land Registry Price Paid Data and from the Office for National Statistics, while the Land Registry house transaction data is much less than that reported by HMRC – the argument to reform Stamp Duty is a familiar one to agents.
However, it was seldom more eloquently put than on the Today programme by the Taxpayers’ Alliance.
Chief executive Matthew Sinclair described it as both the largest single tax bill most people would ever face and also the easiest one for legal tax avoidance: “You simply don’t move house,” he pointed out.
Chartered accountants Blick Rothenberg estimate, based on HMRC transaction figures, that the Treasury is coining in an average of £600m per month in Stamp Duty.
Frank Nash, a tax partner at the firm, said: “Stamp Duty Land Tax now contributes more than capital gains tax and inheritance tax combined, and clearly demonstrates how important this tax is to the public finances.”
Paul Beresford yesterday argued for a new tier to be introduced.
He said: “A further tier of 2% between £250,000 and £375,000 could substantially increase the number of transactions as buyers are encouraged by the tax savings.
“This would be consistent with the other 1% Stamp Duty increments below £1m and remove the anomaly of the biggest jump being at the bottom of the property scale where it triples from 1% to 3% at £250,000.
“It would make a huge difference to ‘first-time sellers’ in London and the South-East who need more space to start a family, and other areas of the UK where the market remains stagnant, as this tax has to be funded up-front in cash and is a real deterrent to moving.
“Thousands of buyers could benefit from these cost savings if they were implemented.
“The Government would see further economic benefits with an increase in levels of property related business and subsequent tax revenue collection, including higher Stamp Duty revenues from further up the property chain which would offset any subsequent shortfall in revenue in the lower band.
“Currently a purchase price of £250,000 has SDLT at 1% (£2,500) and £290,000 at 3% (£8,700) which is plainly wrong. A 2% threshold on purchase price of £290,000 equals £5,800, saving nearly £3,000.”
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Comments
Ray - so leased about that!
The day that I start disagreeing with the likes of you, AceofSpades (WHERE ARE YOU, AoS???) et al is the day I will heve officially 'lost it'!
Happy days in the meantime! ;o)
Ray- I wont be shopping there, staying local, wont be using the fishmonger however, hes darn rude!
@Every little helps on 2013-08-08 12:08:32
Please do not engage in upsetting language by mentioning the word T-s-o! ;0)
@PeeBee on 2013-08-07 17:44:23
Sorry. I didn't make it clear that I meant in percentage terms. i.e. The VAT percentage does not change just because of the price paid.
No disagreement? ;0)
quagmire - you choose!
Whichever it is - I've been called far, far worse!! ;o)
Ray, how your is Tesco store coming along? You will have budget lines soon.............
pedant:
''excessively concerned with formalism and precision, or who makes an ostentatious and arrogant show of learning''.
Former or later?
quagmire - but then you would have TWO of your chosen product - and the VAT is levied on each not as a whole - so the analogy is hardly relevant I would suggest...
I'm not bored - just a pedant! ;o)
@PeeBee
Not if you diside to buy two budget items because they are cheaper than the one non budget it dosn't.
yeah I'm bored.
Erm... young Mr Evans... I can count on one finger the number of times we have disagreed on matters here on EAT - now you've just gorn and doubled the total!
"Anyone buying a 'budget' line in a shop doesn't pay less or no VAT because it is cheaper."
Actually, they do - by virtue that the product net value will be cheaper, then they pay less VAT as a result.
Don't make me have to disagree with you ever again, Sir!! ;o)
Second thoughts!
Why not do away with 'thresholds' completely?
Every property, whatever the selling price, pays the same.
Percentage can be worked out by hard working civil servants ;0) .That would seem to be fair.
P.S. Anyone buying a 'budget' line in a shop doesn't pay less or no VAT because it is cheaper.
'the Showaddywaddy Bloke'...
You're an angry, angry man. Learn to chill a bit.
Suggest you research modern British history as a relaxation method. It might not lower your highly dangerous blood pressure - but at least it'll show you that Mr Cameron and his motley crew are NOT responsible for current SDLT levels, Teaching Assistants - or any of your other ickle annoyances.
As you sang... "Remember When..."
Terry Holmes - we ALL said it was 'wrong'. We ALL said it would kill the market. And to our complete non-surprise - it didn't. Nor did complete global financial meltdown.
Funny thing, the housing market... innit?
@Pee Brain
Do you like a large state, where the Gov fleeces us, so they can pee our hard earned cash up against a wall?
...and don't come back about how great the crappy NHS is, or how the education system needs funding. Both are a national joke and run appallingly.
How come we suddenly need hundreds of thousands of Teaching Assistants and PCSO hobby bobbies earning ~£20k pa?
Did you grow up with them? I didn't. Sack the lot. Now.
Wet fart Cameron hasn't got the balls, that's why we get obscene SDLT bills. I'm voting UKIP next time.
Re Pee Bee
The 1% to 3% theshold leap was wrong when it was brought in at the time, we said so then and have consistently said so since the last time being pre the 2013 budget.
Yes we have to 'deal with it' but it doesn't make it right and it certainly is 'plainly wrong' at that price level when the biggest hike hits those at the lowest end of the market..
Anonymous Coward - reasons to proof read as follows:
"I just don't get why there are thresholds at all.... Stamp duty should be simple... Index link it to the market... Anyone buying under that price pays NO SDLT."
That would create a threshold, then. A moving threshold at that!
Erm... OOPS! ;o)
biffabeau - have sickened myself saying exactly the same myself re the 'across the board' - with NO lower threshold - but I would imagine hat he percentage would have to be more like 1.25% to produce the same income stream to GB Ltd.
I just don't get why there are thresholds at all.
A percentage tax always increases in line with the value of the item being taxed - therefore more expensive properties automatically pay higher taxes anyway.
Stamp duty should be simple.
Take the average wage.
Calculate a sensible value based on a couple both earning that average wage taking a sensible mortgage with a sensible deposit.
Index link it to the market.
Anyone buying under that price pays NO SDLT.
Anyone buying above it pays 2%.
That means that Mr & Mrs Average buying an average property at an average price will not pay stamp duty.
Unless of course they want to.
Then everyone else (without exception) pays 2% - which is fair.
I do not get why you should pay 5% or more because you buy a more expensive house.
If the income tax system was dealt with correctly (which looks as though may be happening now) then surely you are taxing someone twice for the same thing.
PS - I am Mr Average and own a normal 3 bed semi, not a mansion, but I do aspire!
Stamp duty should go back to pre 1997-Gordon Brown era.
1% across the board.
Increased numbers of people moving will help the economy.
But, I would love this antiquated rip off tax to be scrapped altogether.
So... SDLT thresholds that were set in December 2003 are all of a sudden deemed "plainly wrong".
What were they in 2004...2005 - or even last month for that matter?
I've said it before - I'll say it again. Stamp Duty at ANY level is something that we as Estate Agents simply 'deal' with in the negotiating process. Anyone who can't - shouldn't be selling property.
Been saying that the 'tax' should be incremental for years.
One agent will get nowhere. It should be the 'trade associations' - RICS and NAEA that should be shouting this. In fact they should be more 'visible' in all respects - where are they?
Some 10 years ago I lived in Melbourne Australia, and they had a system which seemed fair. The thresholds and % amounts were similar to UK but one paid stamp duty in increments rather than on the whole. This eliminated the artificial threshold pricings.
great idea but it should be like income tax paying the higher amount at the part over the thresholds
Everybody should pay tax at 1.5% thresholds cause big problems for sellers - meaning that if their house is on the cusp of a band buyers expect them to drop dramatically to avoid having to pay extra tax, but the seller loses a lot more