What is stamp duty – MoneyWeek

Alwayspaidbythebuyer,theratedependsontheasset。

Forsharesitis0。

5%ofthepurchaseprice;onadealworth£5,000,that’s£25。

Forproperty,onhomesworthlessthan£125,000thereisnostampduty。

From£125,001to£250,000,therateisaflat1%;from£250,001to£500,000itis3%;andfrom£500,001itis4%。

So,anyonebuyinga£600,000homewouldpay£24,000。

It’sanicelittleearnerfortheTreasury,butevenbytaxationstandards,stampdutyisunpopular。

Firstly,levyingtaxataflat,ratherthangraduated,ratedistortsthemarket。

A£240,000housewouldincur£2,400stampduty;butforahomeworth£260,000,itjumpsto£7,800。

Thiscreates‘bottlenecks’aroundcertainpricepoints。

Secondly,thevaluationbandshavebarelybudgedintenyears–theonlyrecentconcessionwastheraisingofthe0%bandfrom£60,000to£125,000in2006–yetUKhousepriceshaveroughlytripledoverthesameperiod,creatingahugeGovernmentwindfall。

Thirdly,actualre-registrationcostsforsharesandpropertyareminimalanddon’tvaryinthewaythistaxsuggests。

Finally,giventhatfewUKpropertiesnowcostlessthan£125,000,stampduty,whichmustbesettledatthetimeofthedeal,penalisescash-strappedfirst-timebuyers。

Similarly,theLondonStockExchangearguesthatthe0。

5%leviedonshares,forwhichtherearefewequivalentsoverseas,hurtsthecompetitivenessoftheBritishequitymarket。

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