by Mark Johnston
Stamp duty is a tax levied by the government on the transfer of properties. If the purchase price of a property is less than £125,000 however there is no stamp duty to pay.
Stamp duty land tax was introduced in December 2003 and replaced the old stamp duty on purchases of flats, houses, other land and buildings.
– 0% paid at 0-£125,000
– 1% paid on properties costing between £125,000 and £250,000
– 3% paid on properties costing between £250,000 and £500,000
– 4% paid on properties costing more than £500,000
A stamp duty holiday for first time buyers only was launched in the 2010 budget. This exempts those buying their first home from stamp duty up to a property value of £250,000 until March 2012; however it only applies to those who have never owned a property before.
However, just last week the chancellor George Osborne announced the end of this stamp duty relief for first time buyers.
The housing minister Grant Shapps agreed with this decision stating that ‘the government could not afford to extend the holiday past net spring’.
Despite the problems first time buyers still face as the measure had been ‘ineffective in increasing the number of buyers entering the market’, the government said it was ‘sticking’ with the schedule.
The government is instead prioritising more effective measures which provide better value for money, such as the new government housing strategy which was announced earlier this month.
Paul Smee, director general of the Council of Mortgage Lenders (CML), said “while the stamp duty concession may not have stimulated additional demand, it was a significant help to home owners entering the market and its removal runs counter to the new housing strategy”.
President of the National Association of Estate Agents (NAEA), Wendy Evans-Scott said “first time buyers are the lifeblood of the property market, and our recent data shows the number of first time buyers getting on to the hosing ladder has reached a 3 year low”.
Some experts believe that stamp duty should be completely scrapped. This notion comes as the Institute of Fiscal Studies (IFS) published the results of a 5 year investigation in to the UK tax and it concluded that the current regime is ‘ineffective, overly complex and frequently unfair’.
Paul Johnson, director of the Institute of Fiscal Studies (IFS) and former treasury staffer, said “stamp duty was a ‘bad tax’ because it reduces the number of transactions due to the huge tax bill associated with buying a new property”.
Mr. Johnson suggested that the Institute of Fiscal studies (IFS) revolutionary proposals were a strategy for the long term and added “we are not proposing that this is the content for George Osborne’s next budget, it should be ‘a set of directions’ for the next ten to twenty years”.
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