News: UK's 'Record breaking' stamp duty rip-off

Thu, 15 Nov 07

Stamp duty revenue from residential property sales in the UK rose by 40% (£1.8bn) in 2006/07 to a record £6.4bn. 

Here are some other important key facts:

  • Over the past five years, annual residential stamp duty revenue has more than doubled with a 140% rise from £2.7bn in 2001/02 to £6.4bn in 2006/07.

  • Residential stamp duty revenue raised at the higher stamp duty bands (3% on sales between £250,000 and £500,000 and 4% above £500,000) accounted for 79% of all residential stamp duty revenue in 2006/07, at £5.1bn. Five years ago in 2001/02, the higher stamp duty bands contributed 61% of total residential stamp duty revenue.

  • Stamp duty revenue raised from sales of properties valued at more than £250,000 rose by 208% in the past five years from £1.6bn in 2001/02 to £5.1bn in 2006/07. More than nine-tenths (92%) of the rise in the total annual residential stamp duty take over the five years has been due to an increase in the amount raised at the higher stamp duty bands.

  • The higher stamp duty thresholds - £250,000 and £500,000 – have been unchanged since their introduction in 1997 despite a 191% increase in the average house price over the period. The 1% stamp duty threshold was increased from £60,000 to £120,000 in March 2005 and then rose by a further £5,000 in March 2006.

  • However, even these increases have not kept up with the pace of house price inflation. House prices have increased by 222% since March 1993 (when the 1% threshold was raised to £60,000) compared with a 108% rise in the stamp duty threshold.

  • If the higher stamp duty thresholds were increased in line with house price inflation since July 1997 - when the £250,000 and £500,000 stamp duty thresholds were introduced - the £250,000 threshold would now stand at £729,000 and the £500,000 would be £1,458,000. If the lowest stamp duty threshold had been increased in line with house price inflation since March 1993, it would now stand at £193,000.  This would be £68,000 above its current level of £125,000.

  • Halifax estimates that 25% of properties in the UK, 5.4 million, are now valued above the £250,000 stamp duty threshold; and 900,000 (4%) are valued above the £500,000 threshold. London and the South East account for 60% of homes valued above £250,000 and 72% of homes valued above the £500,000 threshold.

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