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New campaign calls for UK property tax to be cut

As a result campaigners are calling for a cut in the property tax as it is becoming onerous for many home owners, especially families. The research from the TaxPayers Alliance also suggests that the high level of the tax means that people are being put off buying their first home or moving to a bigger one.

While home buyers in London and the South East are hardest hit, more people across the country are being hit by Stamp Duty at the 3% rate. Families buying a home for between £250,000 and £500,000 pay between £7,500 and £15,000 in Stamp Duty.

It has launched its Stamp Out Stamp Duty campaign and is urging the government to ease the burden on home buyers and potential home buyers by cutting what it says is an unfair double tax.

Matthew Sinclair, chief executive of the alliance pointed out that when in opposition Prime Minister David Cameron and Chancellor George Osborne promised to increase the Stamp Duty threshold in 2007 but nothing has been done.

‘Owning your own home is an important milestone, but for many families it seems harder and harder to reach. Ministers have done nothing to ease the burden imposed by Stamp Duty, which is an unfair double tax that gets in the way of would be first time buyers and others thinking about moving,’ explained Sinclair.

‘Instead they have made things worse with new thresholds and new, higher rates. The government needs to act on ministers' rhetoric about getting people onto the property ladder and cut this unfair tax,’ he added.

Those in the real estate industry agree that there could be a fairer stamp duty system. ‘A further tier of 2% stamp duty land tax 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 £1 million 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,’ said Paul Beresford, managing director of Beresfords.

‘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,’ he added.

The research shows that in 2012/2013, over £4 billion was paid by home buyers in residential Stamp Duty, of which £3.6 billion was paid at a rate of 3% or more. Some 723,829 homes were bought in 2012/2013, with more than a quarter, 182,692, being liable for Stamp Duty at a rate of 3% or more.

It details how much was paid in each region. In the North East 6% of all homes in the region 2,021 homes were bought with a Stamp Duty rate of 3% and these transactions made up 64% of total Stamp Duty revenues in the region. In Yorkshire and the Humber it was 9%, making up 70% of total Stamp Duty revenues in the region and in the North West it was 9% accounting for 72% of total Stamp Duty revenues in the region.

In the East Midlands 10% of sales paid Stamp Duty at a rate of 3%, making up 69% of total Stamp Duty revenues in the region while in the West Midlands it was 12%, making up 73% of total Stamp Duty revenues in the region. And in Wales 8% of transactions paid 3% or more, accounting for 64% of total Stamp Duty revenues in the region.

London saw the greatest number with 65% of all of the transactions paying 3% or more in Stamp Duty, making up 97% of total Stamp Duty revenues in the region. Levels were also high in the South East with 3% being paid on 39% of all transactions, making up 91% of total Stamp Duty revenues in the region.

In the East of England it was 27%, accounting for 85% of total Stamp Duty revenues in the region and in the South West it was 24%, making up 81% of total Stamp Duty revenues in the region.

The alliance also pointed out that two recent major reviews of the British tax system, the 2020 Tax Commission from the TaxPayers’ Alliance/Institute of Directors and the Mirrlees Review from the Institute for Fiscal Studies, concluded that Stamp Duty should be abolished.

It also pointed out that apart from stopping some people from getting on the property ladder in the first place, Stamp Duty prevents people from moving when they need to. The result is that people stay put when it would make sense for them to move for a variety of reasons, such as getting a new job; being closer to relatives; or having enough space for a growing family.

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