Brown urged to reform stamp duty
Published On 15 March 2007
Chancellor Gordon Brown should use the upcoming Budget to reform stamp duty land tax, according to a major mortgage broker.Mr Brown will deliver this year's Budget on March 21st and Ray Boulger, senior technical manager with John Charcol, has not yet given up hope that the chancellor will use the occasion to make life easier for first-time buyers.
Presently, a homebuyer spending £250,000 on a property is required to pay one per cent in stamp duty land tax, which amounts to £2,500. If the price of the property is bumped up to £252,500, however, the buyer will have to pay £7,575 in tax, which equates to a 203 per cent increase.
Mr Boulger is concerned that stamp duty land tax has failed to keep up with house price increases, which has inevitably hit first-time buyers more than most.
The average property price in the UK is now up to £200,000 and Mr Boulger believes that it makes sense to set the lower limit at this mark. The current level of £125,000 is described by Mr Boulger as "paltry" and he has called on the chancellor to raise this threshold along with all other limits.
"The system as it stands is massively flawed and requires a complete overhaul to make it fairer and bring it in line with current property market conditions," he said.
Critics have pointed out that the existing inheritance tax (IHT) system is subject to the same flaws, as it has failed to keep up with house price growth. Research from Halifax indicates that the number of postcode districts where average house prices are above the IHT threshold has doubled in the past five years.
