Why stamp duty could and should be cut

Given that the government is running a £40 billion deficit, is determined to increase spending on infrastructure and will not be facing an election for another five years, no-one should get their hopes up too much for tax cuts in the Budget. Indeed, most of the talk has been of possible rises. But if any tax is going to be cut it is likely to be Stamp Duty on property purchases, at least those made by owner-occupiers at the lower end of the market. No tax has been jacked up quite so much over the past two decades.

When Gordon Brown started as Chancellor buyers paid a flat one per cent of the value of the property they were buying. Now there are progressive bands, as well as a three per cent surcharge for second or investment properties. As a result, the buyer of a million pound property – who would have paid £10,000 in stamp duty in 2000 – will pay £43,750.