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‘End stamp duty on homes under £500K’: Senior Tories’ £16bn wishlist

A group of influential Conservative MPs is calling on the Government to cut £16bn worth of taxes in the Autumn Statement.

The Free Enterprise Group calls for a major increase to the 40p income tax band, huge cuts to stamp duty and a radical shake-up of the VAT system.

The 42 MPs include Treasury financial secretary Sajid Javid and Treasury select committee chairman Andrew Tyrie along with other senior party figures.

On property, the group calls for stamp duty to be scrapped on homes worth less than £500,000, costing £2.4bn.

The paper says abolishing the 1 per cent and 3 per cent bands would improve the “notoriously inefficient” tax.

The Council of Mortgage Lenders estimates stamp duty revenue will rocket 50 per cent in the next five years.

Both the CML and Building Societies Association are calling for a more progressive system to be introduced.

The FortyGroup, another grouping of Conservative MPs in marginal seats, want stamp duty to be paid by sellers instead of buyers.

On income tax the MPs want the 40p tax band to be raised from £41,450 to £50,000, costing £5bn.

They say the 40p rate was only intended for the “very rich” but has grown by a factor of six in the last 30 years.

Other proposals include a flat rate of VAT of 15 per cent, which would see huge cuts for currently VAT-able products and services.

However, areas where VAT is not currently charged such as newspapers, children’s clothes or food would see huge rises.

The Free Enterprise Group says the VAT changes would be revenue neutral but reduce “distortions”.

It also wants a £3.8bn freeze to business rates for the next three years and the abolition of employers’ national insurance contributions for under-25s, costing £290m.

Finally, it wants the abolition of air passenger duty and green taxes, costing £1.5bn and £2.8bn each.

The group sets out a series of options to pay for the changes amounting to £26.2bn worth of spending cuts.

They include ending the ring-fencing of health and education, saving £7bn or halving the number of Government departments from 20 to 11, worth £8bn.

It estimates three-year cash freeze of benefits excluding pensions would save £3.4bn, means testing winter fuel allowance and free TV licenses would bring in £2bn or revenues.

Other benefit changes include integrating Child Benefit with Universal Credit, saving £4.5 bn, or abolishing Housing Benefit for under 25s, worth £1.8 bn.

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Comments

There are 2 comments at the moment, we would love to hear your opinion too.

  1. Stamp duty makes it very costly to move, particularly for those wishing to move sideways or downsize, prevents people from moving to their ideal location, and impedes free movement of labour.
    Existing stamp duty thresholds distort the market, and successive governments have failed to review their % tax take in light of property price inflation and regional variations.
    The suggested removal of the duty for properties <£500k may be welcome news for some, but will it actually help many people. With demand in the housing market so strong at the moment, wouldn't this simply fuel further unwanted house price inflation. Even if succeeds in helping the target group, what about those not in the target group. This proposal only makes it even more difficult for anyone trying to sell just over the £500k. How about some principle-based changes that make it fairer for all.

  2. SiFo…it seems easy to me. How about Stamp Duty starting at 3% for all property at whatever price with an exemption for those resident and domicile in the UK for their principle private residence?

    The other proposals are all sensible. Like a business, the Government needs to invest in the economy, and they can do this by reducing and simplifying the tax system. This will increase economic activity and people are prepared to pay reasonable and proportionate taxes, whilst they avoid huge taxes.

    The 40p rate was introduced for company directors, solicitors and professional footballers. No-one expected it to be paid by teachers, librarians and building inspectors.

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