The lender believes that reforming the system in this way will give borrowers a fighting chance.
Charcol has called the tax 'hugely unfair' saying it 'significantly distorts the market'.
Drew Wotherspoon of Charcol.co.uk commented: “Stamp duty really is a tax for nothing and should be abolished, but that is never likely to happen. One obvious way to reform the system would be to mirror the way that income tax is calculated so that the higher percentage rates of tax are only payable on the amounts over certain thresholds. This need not result in a reduction of the total tax raised provided that the rates charged between each band are increased.”
The lender has outlined two case studies which it feels best encapsulate the changes it is calling for. They are as follows:
Current Structure
A buyer wants to purchase a home priced at £250,000. At current rates they would pay 1 per cent in stamp duty land tax for this property, i.e. £2,500. However, if competition for the property pushed the price up to £252,500 they would have to pay £7,575.
Thus a 1 per cent increase in the price to £2,500 results in a 203 per cent increase in the tax to £5,075.
Suggested new structure
One suggestion would be for the new tax rates to be 0 per cent on the first £200,000, 5 per cent on the next £800,000 and 6 per cent on anything above £1m.
In this scenario the tax payable on a £500,000 purchase would be exactly the same (£15,000) and on a £1m purchase also exactly the same (£40,000). At all other prices below £1m the tax would be less than at present and above £1m, which would include many commercial properties, it would be more.
