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Jonathan Isaby: It’s time to stamp out Stamp Duty

Jonathan Isaby is Political Director of the TaxPayers’ Alliance.  Follow Jonathan on Twitter.

Screen shot 2013-08-05 at 16.45.51When the Government seeks to justify the taxes it slaps on tobacco, we are told that it is part of an agenda to discourage smoking, because it is bad for us and costs the NHS money. Likewise, part of the rationale for slapping taxes on motorists and air travellers is to punish us for behaviour which is bad for the environment.

So if politicians are to insist on using the tax system to discourage behaviour which they believe is bad, then surely we can at least rely on them to ensure that it is not discouraging behaviour which they believe to be good, can’t we?

Alas not. For as long as I can remember, politicians have – rightly – lauded the idea of home ownership: allowing individuals and families to give themselves the security and stability of their own roof over their heads. Yet there remains an insidious tax which is making the dream of home ownership all the more distant for hundreds of thousands, if not millions of people. I refer, of course to Stamp Duty.

New research published today by the TaxPayers’ Alliance lays bare just how punishing a burden this tax now is for anyone wanting to buy a home, whether as a first-time buyer, or in order to move from an existing home to accommodate a larger family or to be nearer relatives or a new place of work.

Whilst the relatively few homes bought for less than £125,000 attract no Stamp Duty, the rate is 1 per cent for those sold for between £125,000 and £250,000, meaning that a home bought at the upper limit of that band lands you with a bill for £2,500.

But the tax becomes increasingly punitive once the price tag exceeds £250,000, with more and more people falling foul of the three per cent band covering homes sold for between £250,001 and £500,000. Indeed, because of the ‘slab rate’ nature of the tax, when the price of a home rises to £250,001, you suddenly find yourself forced to write a cheque to the taxman for an eye-watering £7,500. And you cannot borrow that as part of a mortgage – it is a further upfront cost additional to the deposit and legal fees incurred when you move.

Our research shows that more than a quarter of home-buyers across England and Wales are now being hit by Stamp Duty at a rate of three per cent or above, with that figure rising to 39 per cent in the South East and an astounding 65 per cent across Greater London.

This is why we have launched our Stamp Out Stamp Duty campaign: to persuade the politicians that it is time to ease the burden on home-buyers, which is in fact something that George Osborne promised to do back in 2007. Lest we forget, he told the Conservative Party Conference that he wanted, in particular, to abolish Stamp Duty for almost all first-time buyers because your dream is our dream too. Your aspiration is our aspiration. We will get you out of tax and into your home.”

So please go to the campaign website, where you can see how your area is affected by Stamp Duty and send a message to your local MP asking them to support the campaign.

Stamp Duty on residential property raises in the region of £4 billion per year – less than 1 per cent of total government receipts – yet it is making home ownership an even more distant dream for so many people. If ministers really want to help people get onto the property ladder, they must act on their rhetoric and cut this unfair tax.


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