Bank calls for stamp duty change

5 March 2007

One of the UK’s leading banks has called on the Government to raise stamp duty thresholds, in order to reflect rising house prices. The Bank of Scotland says the number of Scottish home sales over the upper limit has trebled in the last five years.

Around one in 10 buyers in Scotland paid 3% stamp duty on the value of their new home last year. This means a stamp duty bill of at least £7,500.

The Chancellor, Gordon Brown raised the minimum limit for stamp duty two years ago, from £60,000 to £120,000 – to help first-time buyers get onto the property ladder. He raised it again last year, so that 1% stamp duty is now charged on homes costing between £125,000 and £250,000. But the upper limits for stamp duty haven’t been changed since they were introduced ten years ago.

Today, the Bank of Scotland said these thresholds should be adjusted to reflect the fact that house prices have risen by 175% since 1997. Stamp duty is 3% on homes costing between £250,001 and £500,000, and rises to 4% on properties costing more than half-a-million pounds.

The bank argues that if those 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 £1.36m.