Beleaguered homeowners will not be pleased to hear that stamp duty in the United Kingdom has risen by over 40% in the past 12 months. The government has cashed in on the ballooning home prices and property purchases at record levels have helped to swell, the treasury coffers.
Home buyers paid in excess of 6.4 billon pounds in property taxes last year, insuring a record pay day for the chancellor. This information has recently become available on the HM Revenue website. This amount of additional taxation is an increase of 40% over that amount collected in 2005/2006 and is nine times the amount paid before Labour came to power in 1997. The burden on homeowners is now at worrying levels. The purchase of a home is very expensive, and the associated costs of purchase are also at record levels. Many homeowners are simply finding it all too much, recent reports that home insurance bills are likely to rise as a result of the recent bad weather claims, is also adding to the stress and strain of owning a property.
Stamp duty is viewed by most people as simply another stealth tax, you pay Stamp Duty Land Tax on various property like houses, individual flats on leases, other buildings and of course land. Stamp duty is also payable on stocks and shares and any increase in equity purchases will also see the government reaping more money. At the present moment, if the purchase price of your home ( or buy to let property for that matter)) is £125,000 or less you don’t pay any Stamp Duty Land Tax at all. If it’s more than £125,000, you pay between one and four per cent of the whole purchase price, on a sliding scale.
Property price Stamp Duty up to £125,000 0% £125,001 – £250,000 1% £250,001 – £500,000 3% £500,001 or more 4%.
However, the government does allow a concession to stamp duty on property, If you’re buying a building in an area that is designated by the government as’disadvantaged’, you don’t have to pay any Stamp Duty Land Tax if the purchase price is £150,000 or less. A visit to the HM Revenue website will be able to provide you with more information about this scheme.
In response to this information and in a bid to assist first time buyers and keep the property market ticking, the Conservatives have promised to abolish stamp duty for first time buyers.. This should help enable many more families get on the property ladder for the first time and the saving on taxation could be in the region of several thousand pounds. This initiative is being seen as a step in the right direction as many potential homeowners are being out off from buying by the threat of rising interest rates.
Many experts are now predicting that house prices are set for a reduction in the new year and this points to the government probably having seen the best years from property taxation. Stamp duty is directly related to house prices and any drop in price will also mean less money for the chancellor.