Chancellor John Healey has been urged to use this month's Budget to abolish stamp duty, a move that would save families thousands of pounds and ease Britain's housing crisis. The Institute of Economic Affairs (IEA) claims scrapping the tax would remove a "major barrier" to economic growth.
The IEA wants Stamp Duty Land Tax (SDLT) abolished entirely on residential and non-residential property transactions in England and Northern Ireland. The Conservatives have pledged to scrap the tax on primary residences, but the IEA makes the case for going further in a bid to "unlock Britain's housing market".
Savings for homebuyers
Its analysis found that under standard residential stamp duty rates, someone buying a £500,000 home would save £15,000 if it was abolished. A buyer purchasing a £300,000 home would save £5,000.
The IEA argues stamp duty not only adds thousands of pounds to the cost of buying a home, it discourages households from moving for work, switching to homes that better suit their families or downsizing in retirement.
Political support
Valentin Boboc, the IEA's chief economist, said: "Politicians are finally recognising that stamp duty is a damaging tax, but the Chancellor has an opportunity to go further and abolish it altogether. People should not face a huge tax penalty for moving for work, finding a home that better suits their family or downsizing in retirement. Stamp duty doesn't just make moving more expensive. It discourages transactions, reduces mobility and prevents homes from being put to their most productive use. Scrapping it would cut the cost of moving, help get Britain's housing market moving again and remove an unnecessary barrier to economic growth."
Strong support has come from John O'Connell, chief executive of the TaxPayers' Alliance. He said: "Stamp duty is a terrible tax that acts as a direct penalty on aspiration, mobility, and economic growth. Taxing people tens of thousands of pounds simply for moving home, relocating for work, or downsizing in retirement clogs up the housing market and drags down the wider economy. The Chancellor should listen to these calls and scrap this damaging tax altogether."
Industry and Treasury response
Shadow Housing Secretary Katie Lam said: "Stamp duty is one of the worst taxes – it's a tax that restricts every part of the housing market. It stops older people from downsizing and families from scaling up, and prevents aspirational younger people getting on the housing ladder in the first place. Labour has catastrophically failed to deliver the homes Britain needs, and their ever-growing list of taxes pushes the dream of owning a home further away for millions of aspirational, hard-working people. By scrapping stamp duty on the family home the next Conservative Government will get every part of the housing market moving."
The Home Builders Federation is pressing for the Government to "the number of first-time buyers having to pay stamp duty". A spokesperson said: "The costs facing homebuyers is significantly limiting the number of housing market transactions, bringing significant economic and social consequences. Housing market activity is much lower today than in previous generations but every 100,000 home moves creates £1billion in economic activity."
A Treasury spokesperson said: "As has always been the case, decisions on tax are a matter for the Chancellor to set out at fiscal events, rather than routinely commenting on rumour, speculation or proposals."
