The deputy director of the Institute for Fiscal Studies has called for stamp duty to be axed.
Writing exclusively for i, Helen Miller said it “imposes a heavier tax charge on properties that change hands more often” and “there is no good reason to do this”.
Ms Miller, head of tax for the independent and respected economics think tank, added: “It gums up the housing market, meaning people find it harder to move to where the jobs are, young families struggle to trade up, and older people hold onto bigger properties than they need, because it costs so much to move… stamp duty should simply be scrapped.”
Buyers paid £15.4bn in stamp duty over the tax year 2022-2023. Currently, it is paid on increasing portions of the property price when you buy a residential property. In England, the tax only applies to homes over £250,000, above which the buyer pays up to 12 per cent.
In Scotland, there is no Land and Buildings Transaction Tax – the equivalent of stamp duty – on the first £145,000 above which buyers are taxed up to 12 per cent, and in Wales, the Land Transaction Tax is triggered at £225,000 and also goes up to 12 per cent.
Earlier in the summer, another think tank, the Resolution Foundation, called on the Government to reduce stamp duty by 50 per cent to boost the country’s productivity.
The foundation proposed cancelling the 2025 rise in stamp duty, and halving rates for main homes and non-residential properties, at a total cost of £5bn. It said this would make it cheaper for people to move jobs and homes while helping firms grow and move premises.
Ms Miller’s comments came as the IFS called for the tax system to be reformed more broadly. A report by the institute found that tax revenue is now 37 per cent of national income – the highest level since the 1940s – and rising, and that taxes will have to go higher in the coming decades to fund health and social care costs for an ageing population, as well as costs associated with climate change.
The report also looked into how the tax system encouraged people into self employment, and how wealth “tends to be undertaxed relative to labour income… and in some cases – including the gains made on main homes – completely untaxed.”
This combined, with high marginal tax rates caused by “humps” in income, reduce the incentive to work, or change how people work, which creates “an unnecessary drag on productivity”.
Ms Miller also wrote that inheritance tax is currently “easily avoided by the healthy, wealthy and well advised”.
