Charcol.co.uk launches online petition to stamp on stamp duty

Charcol.co.uk, UK online mortgage broker, has launched an online petition to make stamp duty fairer. Whilst it is unrealistic to think that stamp duty will be abolished completely the current system is both hugely unfair and significantly distorts the market around the threshold levels.

Drew Wotherspoon of Charcol.co.uk comments: “Stamp duty really is a tax for nothing and should be abolished, but that is never likely to happen. One obvious way to reform the system would be to mirror the way that income tax is calculated so that the higher percentage rates of tax are only payable on the amounts over certain thresholds. This need not result in a reduction of the total tax raised provided that the rates charged between each band are increased.”

To show how unfair the tax is, and a suggested replacement structure, it is best to give examples:

Current Structure

A buyer wants to purchase a home priced at £250,000. At current rates they would pay 1% in stamp duty land tax for this property, i.e. £2,500. However, if competition for the property pushed the price up to £252,500 they would have to pay £7,575. Thus a 1% increase in the price to £2,500 results in a 203% increase in the tax to £5,075.

Suggested new structure

One suggestion would be for the new tax rates to be 0% on the first £200,000, 5% on the next £800,000 and 6% on anything above £1m. In this scenario the tax payable on a £500,000 purchase would be exactly the same (£15,000) and on a £1m purchase also exactly the same (£40,000). At all other prices below £1m the tax would be less than at present and above £1m, which would include many commercial properties, it would be more. Wotherspoon concludes, “We are sure that this is a fairer way to calculate the tax. Consumers should visit our website to sign the petition and we can then present it to the government when we have enough signatories.”

To sign the petition please visit charcol.co.uk/stamp-duty-petition.