Time to demolish Stamp Duty for first time buyers
The ongoing credit crisis and increasing problems in the housing market make it critical for the government to not only abolish Stamp Duty for first time home buyers as a matter of urgency, but to totally rethink the whole concept of the charge on property transactions, says ACCA (the Association of Chartered Certified Accountants).
The accountancy body has already called for a temporary Stamp Duty ‘holiday’ while the Mortgage Finance Working Group, announced by the Government in April, carries out a review of the sector. But now it believes the only way to kick start an ailing housing market and restore a ‘feelgood’ factor would be to abolish the duty for first time buyers, for at least a period of two years.
Stamp Duty has not been paid by first time buyers in Ireland for more than a year and ACCA believes the UK market would become more buoyant should the Government exempt first timers from the charge, which can add over £2,500 to the cost of house buying in the more expensive parts of the country.
Chas Roy-Chowdhury, head of taxation at ACCA, says: “The Working Group is looking at how to improve the robustness of the market, but any house builder could tell them that for a structure to be strong it needs good foundations, and a thriving first time buyer market is the necessary base from which to build a healthy housing market.
“Removing Stamp Duty – nothing more than a tax on property purchases – would send out a message that the Government is serious about helping home buyers and an embattled housing industry. It has worked to make the Stamp Duty hit less dramatic by increasing exemptions over recent years, but it should go all the way and remove Stamp Duty for first time buyers.
“ The Working Group should also look at ways to make Stamp Duty much less punitive and regressive in other parts of the residential market. This could be achieved by removing the slab system, which means stamp duty jumps by whole percentage points at certain price thresholds, and replacing it with a more progressive system, such as that used in income tax,” said Chas Roy-Chowdhury.
Residential Property price
Up to £125,000 0%
£125,001 to £250,000 1%
£250,001 to £500,000 3%
£500,001 or more 4%
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For further information please contact:
Chas Roy-Chowdhury, Head of Taxation phone: +44 (0)20 7059 5976 / + 44 (0)7710 707516 e mail: chas.roy-chowdury@accaglobal.com
Colin Davis, Head of International Communications phone: +44 (0)20 7059 5738 / +44 (0) 7720 347713 e mail: colin.davis@accaglobal.com