Bank calls for rise in stamp duty thresholds

Nearly one in 10 buyers now paying higher rates as house prices continue to soar

News, 5 March 2007

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The Bank of Scotland has called for stamp duty thresholds to be raised to reflect what it calls the significant rate of house price inflation over the last decade.

Research carried out for the bank shows that nearly one in 10 Scottish home sales now attracts stamp duty above the 1% starting rate. The rate is 3% for homes costing between £250,001 and £500,000, and 4% for homes above £500,000. These thresholds have remained unchanged since they were introduced in 1997, during which time house prices have risen by an average 175%.

The bank claims that if the thresholds had gone up in line with house price inflation since 1997, the £250,000 limit would now be £680,000 and the £500,000 barrier would be £1.36 million.

Group economist Tim Crawford said: "Stamp duty revenue raised from home sales continues to rise rapidly. Bracket creep has been a key factor... [The bank calls] on the government to increase the stamp duty thresholds in line with the increase in house prices since the mid 90s and to commit to index linking all the stamp duty thresholds to house price inflation in the future."

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