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Former Conservative minister calls for regional stamp duty

A former Conservative minister has called on the party to include proposals for regional stamp duty thresholds in its election manifesto.

Currently, stamp duty is levied on all properties worth more than £125,000 at a rate dependent on their value.

Speaking to Money Marketing, former Children’s minister Tim Loughton says higher house prices in London and the South East mean people in these regions pay more stamp duty than people with similar properties in other parts of the country.

Last month, research from Lloyds Bank suggested the Government has seen an extra £1bn in revenue from the levy because of increasing house prices.

Loughton, who is MP for the Sussex constituency of East Worthing and Shoreham says: “I would like to see many more people taken out of stamp duty altogether by raising the lower threshold. There could be cap so that an average family wouldn’t pay disproportionately more.

“It should absolutely be part of the manifesto but I would like to see it come out at the next Budget.”

John Charcol senior technical manager Ray Boulger says Loughton’s idea is reminiscent of efforts by former Labour chancellor Gordon Brown to reduce stamp duty for disadvantaged areas. In the late 1990s, Brown introduced a new starting threshold of £150,000 for disadvantaged areas that were identified by the first half of their postcode.

This has since been dropped by the coalition Government.

Boulger says: “However you identify these areas you are going to include in most cases widely divergent areas. In the changes brought in by Gordon Brown, Holborn was identified as disadvantaged. Now maybe parts of Holborn are disadvantaged but certainly all of it is not. The logistics of making regional stamp duty work would just be ridiculously complicated.

“It would be much better to move the system away from the slab system.”

Advies Private Clients IFA Alex Reynolds is based in London. He says: “It would be very welcome here because stamp duty is huge for people buying in London and it is stopping people moving.

“But I think it would be a suicidal policy for the Conservatives to have in their manifesto. The other parties would just say they are doing it for all their friends who buy expensive houses. It would have to be very carefully targeted and that means complexity.”

Cardiff-based Neil Soundy Financial Services’ managing director Neil Soundy agrees the policy would not go down well in those areas which do not benefit.

He says: “As it stands it is a fair and transparent tax that everyone understands. If you start introducing regional elements it gets far more complex. This would basically be a postcode lottery and will mean drawing boundaries where people on one side of the street will benefit and other will not. I think it will be quite divisive.”

Last month, the Institute for Fiscal Studies said stamp duty is one of the worst designed and most damaging taxes and serves as a drag on the housing market. 

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Comments

There are 9 comments at the moment, we would love to hear your opinion too.

  1. Following the success of the Tour de France there is a growing movement for independence for Yorkshire. We have a bigger population than Scotland, we win more Olympic golds than Scotland or the rest of England, and we have the most beautiful scenery in England. Just think, we would not have those meaningless statements about overheating house prices that we are having to live with constantly because of the London bubble. The stuff that comes out of London is meaningless here. It’s another country.

  2. Alasdair Sampson 8th July 2014 at 5:34 pm

    @ Ken Durkin

    As a passionate patriotic Scot and a passionate and patriotic Brit, can I suggest that you wait until you see what happens in our referendum before you jump in both feet first?

    Firstly, we have Alex Salmond. I wish we didn’t, but we do. He and his party have, at best, a tenuous grip on economic and fiscal policy. Every week….no, every day, we get a new promise of a new sugary sweetie to bribe us to vote Yes!

    Personally, I think his boat has sailed and he missed it. At least I hope so as the Union Flag looks just fine the way she is.

    However, let’s see how London lives up to the promises they have made if we do vote No!

    Caution, Yorkshire, you might get what you want!!

  3. Why is property so expensive in certain parts of the South, London in particular? Ah that’s right, because it has risen significantly more in value than in other parts of the UK, particularly in recent times.

    Therefore it is a better investment and worth paying more for is it not?…You can’t have it all ways!

  4. Er Ken…have you seen house prices in Harrogate?

  5. I’d prefer to chew on the ‘yes’ campaign’s “sweetie” to the ‘no’ campaigns horse manure! The Treasury cited an academic study on the setup costs of independence in their recent widely publicised analysis – the academic responsible said the Treasury had “badly misrepresented” his work. Scare mongering at its worst.

    An independent Scotland would be neither a land of milk and honey nor a basket case. For me, that means the decision should be on non-economic reasons. Getting away from self-serving policies designed solely for the benefit of the middle and upper classes in the richest part of the land, such as the Conservative chap above’s, is a good one.

  6. Please do correct me if I am wrong!

    Most good quality London properties are being sold overseas… with no stamp duty and no capital gains tax on the sale to foreign purchasers it makes a very good investment. It’s not fair, BUT that is the way it is and that is also a major contributing factor why London house prices have risen significantly…

    Government need to change this and ensure that UK residents are not disadvantaged and foreign buyers should at least pay the same stamp duty rates on purchase and CGT on sale + also be taxed in the UK on any rental income…

  7. No Victor you are right, i have a brother renting in Camden who was delighted to see a new block going up near Kings Cross, he made enquiries and buying one to be told that the flats were not being marketed in the UK at all and had already been sold off plan in the far east. They will be occupied but UK residents will be paying rents which go overseas and when eventually sold most tax denied to the UK. I’m thinking balance of payments here something is fundamentally wrong about this.

  8. In St Albans like many other towns we already have ” Regional Stamp Duty ” – but it is called . . . . .The Parking Tax . The various ways those wishing to shop in St Albans have to scurry around – a result of James Blake Chief Executive reducing parking places – to inflict higher parking charges upon those who wish to ” shop in St Albans ” – along with increased Rates for shop keepers – and increased competition for market traders – allowing European Immigrants to enter the city – and offload their European goods Bread cheese etc., depriving English Market Traders – and subsequently residents . . . .Tax Tax and More Tax by our Chief Executive Tax Collector James Blake CEO of St Albans council – who reduces services and increases taxes for the County ( with Mr O’ Calloghan finance director ).

  9. Good sound bite but as usual yet another politician who fails to think through the practical implication of implementing such a scheme and the unintended consequences.
    For a start define regional, what is the threshold and what is this bright idea supposed to achieve exactly?

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