THE GOVERNMENT is to reap a record £4.3 billion in stamp duty tax this year, research from Britain’s largest mortgage lender, the Halifax, has found.

Total stamp duty payments have increased nine-fold since 1993, the last time the starting point for the tax was changed.

The Treasury’s failure to raise the lower threshold of £60,000 for stamp duty in line with inflation has added to the problems faced by first-time buyers desperate to get a foot on the housing ladder. In 1993, when annual stamp duty takings were £465 million, the average first-time buyer paid no stamp duty because the typical first-time house price of £45,249 was well below the £60,000 threshold. Today first-time buyers pay, on average, £131,024 for their property. This means that they must find £1,310 in stamp duty, equivalent to 5 per cent of their deposit or two weeks of their gross annual salary.

Martin Ellis, chief economist at the Halifax, said: “According to the Government’s own estimates it would cost the Exchequer around £600 million to raise the lower stamp duty threshold in line with the rise in house prices since March 1993. Halifax also believes that all residential stamp duty thresholds should be linked to house price inflation.”

The starting point for stamp duty — levied at 1 per cent of the value of the property — has remained static at £60,000 since March 1993 when the Conservative Government doubled it. Until 1997 homebuyers incurred only the 1 per cent charge.

When Labour came to power Gordon Brown introduced higher payment thresholds, penalising houses costing more than £250,000 and £500,000. The Chancellor has steadily increased the amount of stamp duty payable on more expensive properties. Buyers of homes worth more than £500,000 must now pay 4 per cent in stamp duty, compared with 2 per cent in 1997. Stamp duty on homes worth between £250,000 and £500,000 has doubled and is now 3 per cent.

Mr Ellis said: “Housing activity is an important part of the UK economy and it is right that a government should take its fair share of tax revenue from it. Fairness is a two-way street, however, and unfortunately successive governments, irrespective of their political colouring, have failed to play fair by homeowners by declining to index link stamp duty threshold to house price increases.”

The Halifax calculates that stamp duty should start at £156,900 to allow for house price inflation. A Treasury spokesman said: “It is clear that home affordability is determined by the ratio of house prices to incomes, and the fact remains that stamp duty, which is paid at no more than 1 per cent for most transactions, has little effect on this ratio.”

ANNUAL STAMP DUTY TAKINGS

1993 £465 million

1994 £520 million

1995 £465 million

1996 £675 million

1997 £830 million

1998 £1.07 million

1999 £1.83 million

2000 £2.15 million

2001 £2.69 billion

2002 £3.52 billion

2003 £3.79 billion

Source: Halifax

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