5th September 2014
MPs have urged the government to help families and axe stamp duty on homes under £500,000.
Anne Main, Conservative MP for St Albans said the current system, which charges 1% stamp duty on homes between £125,001 and £250,000 and 3% on property between £250,001 and £500,000, is hitting first-time buyers and families wanting to move up the housing ladder. Older people wishing to downsize are also being hit.
In a House of Commons debate Main said stamp duty was initially levied on wealthy families but now the government is using it as a ‘cash cow’.
‘Taxes that I believe were originally designed for the wealthy home buyer now bring in so much money to the Treasury…I think it’s being seen as an untouchable cash cow – too big, too lucrative to tinker with,’ she said.
‘Collection of stamp duty in its current forms I believe enshrines inequality, denies fair access to home ownership and taxes aspiration.’
Main went on to say the tax is unfair as it disproportionately affects those in the South where house prices are higher, and does not take into account whether buyers can actually afford to pay the tax.
‘It’s discriminatory – unfairly targeting certain areas of the country regardless of ability to pay and that cannot be fair. It’s the ordinary families being clobbered the most by this tax.’
Dominic Raab, MP for Esher and Walton in Surrey, has long called for the abolition of stamp duty for properties under £500,000 and said if stamp duty had increased in line with inflation since its introduction in 2000 it would only apply to homes worth £1.3 million now.
‘Stamp duty has morphed into a vindictive stealth tax on aspirational Britain,’ he said. ‘It distorts the housing market. It is warping labour mobility. It is penalising savers. And it wallops those on relatively low and middle incomes and I think the case for reform is now overwhelming.
However, the government is likely to resist any change to stamp duty. Treasury Minister David Gauke said even if axing stamp duty for homes under £500,000 stimulated the housing market it would be unlikely to make up the £4.2 billion lost in tax.
‘That is a very substantial sum of money and, at a time where we have to be very careful with public finances, we should bear that in mind.’