Chancellor misses opportunity to help homebuyers

Ray Boulger of Charcol comments: “We hear frequently that the Government is keen to remove all inequality in the tax and benefits systems, but actions speak louder than words, especially from The Chancellor. His silence on reforming the current grossly unfair structure of stamp duty land tax is deafening. Abolishing this tax was always a non-starter, but Charcol would have liked to see it reformed to reflect the way income tax is structured. With income tax, the higher percentage rates of tax are only payable on the amount of income over certain thresholds. However, with stamp duty land tax, once you reach a certain level, borrowers are forced to pay the higher percentage on the total amount.

“As expected the Chancellor has yet again demonstrated his preference to perpetuate an unfair tax rather than undertake a well overdue reform. Therefore we would encourage a back bench amendment to next year’s Finance Bill to at least highlight this problem further and hopefully gain enough support to become law. As a General Election is expected shortly after the Budget, even if the amendment fails at least the publicity could help to make this a live election issue.

“In 1977 the then backbenchers, the late Audrey Wise and Jeff Rooker (now Lord Rooker), spectacularly won the day with an amendment to the 1977 Finance Bill, which became known as the Rooker-Wise amendment. As a result of this success income tax thresholds have ever since automatically been increased each year in line with inflation, unless The Chancellor specifically overrides the increase. Such a clause automatically avoids stealth increases in taxation creeping up on us again. A sensible starting point for the 1% tax band would be the average property price, based on Land Registry figures (i.e. currently £188,000), and the annual inflation adjustment (up or down) should also be based on Land Registry figures.”