Stamp duty is a tax on mobility and aspiration and should be radically reformed.
That’s the call in a report in an influential think-tank.
The Centre for Policy Studies (CPS) wants the Government either to abolish Stamp Duty Land Tax altogether or to raise the threshold at which buyers must pay it to £500,000.
Take 9 out of 10 buyers out of tax
The report, Stamping Down, has been written by the CPS head of policy, Alex Morton, a former adviser to David Cameron when he was Prime Minister.
He says his proposals for reform would mean 90 percent of buyers would no longer pay stamp duty.
And raising the threshold dramatically would also boost house-building activity, Morton says, because demand would grow as buyers would no longer have extra costs to pay on top of the price of their new home.
At the moment home buyers in England pay on average £2,300 in stamp duty on a property purchase. Those buying in the south-east face the highest average stamp duty bill of more than £6,000.
Reforms would cost £1.3bn
Morton’s proposals would only reform residential stamp duty. At the moment buy-to-let landlords and those buying an additional property pay a higher rate of stamp duty.
Retaining those rates would help offset the loss of around £1.3 billion in stamp duty revenue that Morton’s reforms would cost.
The Treasury currently collects around £5.1 billion of stamp duty every year.
More appropriate rate
Morton said: “While the Treasury are right to be fiscally focused, they need to take into account the fact that stamp duty on homes has an impact on transactions, which means cutting this tax is cheaper than expected.
“We propose a far more appropriate rate for the most valuable homes. And that would take nine out of 10 people who just want to buy a decent home for themselves and their family out of the tax altogether.”