The Chancellor of the Exchequer should act now to reform the stamp duty land tax regime for those looking to get a foot on the property ladder as the average property prices continue to rise, according to the Association of Chartered Certified Accountants (ACCA).
With average house prices now at £250,000, ACCA has said that the stamp duty risks preventing first-time buyers from owning a home and that properties with a value below £500,000 should be subject to a fairer stamp duty system.
Chas Roy-Chowdhury, ACCA head of taxation, said: “The cliff edge nature of SDLT has always been very hard to justify, especially at the lower end of the market where young people are taking their first baby steps to get on the housing ladder. With house prices on the rise and lenders loosening the manacles on mortgage lending, this will become an even bigger obstacle for homebuyers.
"While we can understand to some extent that the Government wishes to protect its revenue stream from housing transactions so will not wish to offer any tax reductions at the higher end of house prices we propose that a new system be applied to properties below £500,000. Under that system, the tax would be staged so that 1% tax is paid on the value between £125,000 and £250,000 and 3% on the value between £250,001 and £500,000, in much the same way as income tax.
"On a property worth £500,000 the total stamp duty today, under the current system would be £15,000. Under our proposals it would be £8,500, saving the buyer up to £6,500.”