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Homeowners paying ever-more stamp duty

Monday, 13 March 2006 12:00 AM

Increasing the threshold at which stamp duty is paid has failed to prevent Britons collectively paying ever-more of the tax.

In April 2005, the government raised the stamp duty nil-threshold from £60,000 to £120,000 in response to pressure to help first-time buyers.

But in the first nine months following the change, homeowners have paid nearly £60 million more in stamp duty than in the nine months preceding it, according to research by Portman Building Society.

"Despite government assurances that a rise in the stamp duty threshold would benefit the first-time buyer, they appear to be sucking in more revenue than ever before," said Portman Building Society's Matthew Wyles.

Between March and December 2005, homeowners paid £2.55 billion collectively in stamp duty - £57.2 million more in the last nine months of the old regime.

This was despite a fall in house sales from 782,730 to 737,134 over the two periods.

British homeowners are now paying an average of £3,459 in stamp duty per property purchased, compared to £3,184 before the change, according to the research, which is based on sales data from the Land Registry.

"Stamp duty is a deeply unfair tax especially for those least able to pay it - that is first-time buyers," said Mr Wyles.

"The average first-time buyer property costs over £26,000 more than the stamp duty threshold of £120,000. The raising of the threshold was a purely cosmetic exercise."

"Stamp duty is no more than a form of advance capital gains tax - paid long before buyers have enjoyed any of the financial benefits achievable from home ownership. A more rational solution would be to make sellers, not purchasers, liable which, at a stroke, would liberate first-time buyers from this unjust tax."

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