‘Halve stamp duty to relieve punitive property taxes’

Chancellor Philip Hammond
Chancellor Philip Hammond

A thinktank is urging Chancellor Philip Hammond to cut stamp duty by half, after releasing research showing that Britain has the highest property taxes in the developed world.

The Taxpayers’ Alliance said that “punitive” property taxes - including stamp duty, council tax and business rates - were a “massive burden” on all parts of the UK, and not just on London and the South East as is sometimes assumed.

But figures released by the group showed that more than half (59%) of the £10.9 billion stamp duty on property sales in 2014/15 was paid in London (£4.3bn) and the South East (£2.1bn), followed by the East of England (£994m) and the South West (£827m). By contrast, just £51m was paid in stamp duty in Northern Ireland, £142 million in the North East and £172 million in Wales.

The total £66.8 billion property tax bill in 2014/15 was made up of £28.1 billion in business rates, £27.8 billion in council tax and £10.9 billion in stamp duty, said the TPA in a report.

The national figure was up £1.8 billion (2.8%) on the previous year, with fastest rises in Scotland (4.6%), the East of England (3.7%) and the South East (3.6%).

As a share of regional GDP, property taxes hit hardest in the South West and East of England (4%), followed by Scotland (3.9%), Wales, the South East and the North East (all 3.8%).

On international measures - which also include stamp duty on shares and inheritance tax - the UK was the most heavily taxed of the OECD countries at 4.1% of GDP, followed by France (3.9%), Belgium (3.5%) and Canada (3.1%). Other members of the club of industrialised nations paid property taxes as low as 0.3% (Estonia) or 0.4% (Slovakia) of GDP.

The TPA said that rates of stamp duty should be immediately halved, with a view to eventually scrapping the tax, which is charged at 2% on sales of properties worth over £125,000, with higher rates of 5% for amounts over £250,000, 10% for amounts over £925,000 and 12% over £1.5 million.

Chief executive Jonathan Isaby said: “We often hear about the impact of high property taxes on the overheated London housing market, but the truth is that they are a massive burden in every region of the UK.