Agent calls for new 2% tier in Stamp Duty as concern mounts

Agent calls for new 2% tier in Stamp Duty as concern mounts

An estate agent has called for a new 2% tier of Stamp Duty to be introduced to cut taxes for purchasers of properties between £250,000 and £375,000.

Currently Stamp Duty Land Tax triples from 1% to 3% at purchases of £250,000.

Paul Beresford, of Essex firm Beresfords, said this was “plainly wrong”.

He made the call after Stamp Duty once again fell under the spotlight, with ministers coming under pressure to reform the tax and increase the number of transactions.

New calculations say that more than a quarter of home buyers are now paying Stamp Duty Land Tax at the higher rates of 3% – shelling out at least £7,500.

The research, by the TaxPayers’ Alliance, is underpinning the pressure group’s new Stamp Out Stamp Duty campaign.

It estimates that the tax raised £4bn for the Treasury in 2012/2013, most of which was collected at rates of 3% or more.

Using a mixture of Land Registry and HMRC data, the research says that in England and Wales some 723,829 homes were bought in 2012/13, with 182,692 purchasers being liable for Stamp Duty at 3% or more.

Stamp Duty rates of 3% or more were imposed on 65% of all residential transactions in London, 39% in the rest of the South-East, 27% in the East of England, 24% in the South-West, 12% in the West Midlands and 10% in the East Midlands, according to the research.

In the North, the figures were lower at 9% in the North-West and in Yorkshire and the Humber, and 6% in the North-East. Around 8% of Welsh property purchasers paid Stamp Duty at 3%-plus.

While the research seems to have been based on a slightly unsatisfactory mix of data – as EAT readers know, the Land Registry house price monthly indices vary markedly from the Land Registry Price Paid Data and from the Office for National Statistics, while the Land Registry house transaction data is much less than that reported by HMRC – the argument to reform Stamp Duty is a familiar one to agents.

However, it was seldom more eloquently put than on the Today programme by the Taxpayers’ Alliance.

Chief executive Matthew Sinclair described it as both the largest single tax bill most people would ever face and also the easiest one for legal tax avoidance: “You simply don’t move house,” he pointed out.

Chartered accountants Blick Rothenberg estimate, based on HMRC transaction figures, that the Treasury is coining in an average of £600m per month in Stamp Duty.

Frank Nash, a tax partner at the firm, said: “Stamp Duty Land Tax now contributes more than capital gains tax and inheritance tax combined, and clearly demonstrates how important this tax is to the public finances.”

Paul Beresford yesterday argued for a new tier to be introduced.

He said: “A further tier of 2% 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 £1m 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.

“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.
“The Government would see further economic benefits with an increase in levels of property related business and subsequent tax revenue collection, including higher Stamp Duty revenues from further up the property chain which would offset any subsequent shortfall in revenue in the lower band.

“Currently a purchase price of £250,000 has SDLT at 1% (£2,500) and £290,000 at 3% (£8,700) which is plainly wrong. A 2% threshold on purchase price of £290,000 equals £5,800, saving nearly £3,000.”