View more on these topics

Fight this tax with tea on the Thames tactic

Andy Valvona, director, Mortgage Next Network Stamp Duty is the oldest money-raising trick going. It has been about for well over 300 years and is the oldest tax which is administered by the Inland Revenue.

Stamp Duty was levied in the UK for the first time in 1694 towards carrying on the war against France. It was also a big hit with successive governments and remained in place even when, in 1765, its imposition brought about riots in the American colonies. Perhaps Mortgage Strategy should honour a great historical moment and organise a tea party on the Thames.

The truth is that Stamp Duty – or Stamp Duty Land Tax to give it its full title – is an easy tax for the government to administer and collect, hence the chancellor’s reluctance to do away with it.

The University of Reading recently carried out research on behalf of the Council of Mortgage Lenders and concluded that the current system encourages tax avoidance strategies, such as sellers artificially boosting the value of fixtures and fittings in their properties, and that it also affects first-time buyers more heavily than existing homeowners.

What’s more, Stamp Duty places a greater burden in the south of the county, where it accounts for 75% of residential Stamp Duty revenue, generated from less than 50% of transactions. The research has also concluded that the tax encourages price bunching just below the thresholds where a higher rate applies.

Some commentators argue that, by not linking thresholds to rising property values, the government is applying an automatic stabiliser to the housing market. There is no evidence, however, that this is the government’s strategy or that it has had any stabilising affect on the market. Most people see Stamp Duty simply as a means for the exchequer to make a windfall gain which avoids the need to increase taxes elsewhere.

Chancellor Gordon Brown seems as unwilling as his predecessors to do away with this deeply unpopular tax. Time, I say, for a tea party!

Recommended

The great advertising challenge

Rules in MCOB 3 governing financial promotions alter the way products can be promoted and companies will have to think of innovative ways to present information, says Charlie Geller

Charcol launches federal reserve mortgage

Charcol has launched a federal reserve mortgage. Its initial rate is 2.99% until June 30 2005 and itthen tracks US three months Libor, which is currently 2.50%, for 10 years.Borrowing is in sterling so there is no currency risk. After the initial period to June 30 2005 the interest rate on this mortgage will be […]

TFC Commercial enters specialist buy-to-let sector

TFC Commercial has launched its buy -to- let panel for commercial brokers.Its lender panel compliments both prime and non-conforming business, caters for purchase and remortgage, includes two RAMP exclusives andnine lenders, with another lender to be announced shortly.Nick Sneddon, commercial national sales manager at TFC, says: “As a member of the NACFB we recognise the […]

Millfield unveils multi-tie intentions

Millfield has unveiled plans to launch its multi-tie proposition in Q1/Q2 of 2005. The multi-tie option will be available to all its advisers and will run concurrently with the group’s existing core IFA option. Significantly, multi-tie advisers will be able to be dual authorised, so that they can go off panel if whole of market […]

Who cares?

By Tracey Dickson, marketing consultant There are almost 7 million carers in the UK – that’s around 10 per cent of the population who provide unpaid care for a disabled, seriously ill or older loved one.1 But according to a report from the charity Carers UK, 20 per cent of people providing 50 hours or more of care […]

Newsletter

News and expert analysis straight to your inbox

Sign up