Tuesday, March 15, 2005

Gordon's Budget

One of the pre-budget leaks (I remember a time when any pre-budget leaks were deemed to be disgraceful) seems to be support for first time buyers through a reduction in stamp duty. The much trailed view being that the stamp duty threshold will be raised to £100,000. This is one of the Gordon's better conjuring tricks, offering punters £200 while taking £200 from their wallets. With average house prices already over £100k everywhere in the country and given the how stamp tax is calculated, an increase in the threshold to £100k would not now save the average first time buyer a penny in tax as once the threshold is breached, stamp duty is payable on the entire purchase price, not the difference between the purchase price and the threshold. Gordon would get his headlines of helping first time buyers whilst not losing a penny in revenue. Nice one Gordon!!

Of course, it can be argued that stamp tax is a tax on house sellers rather than house purchasers, but that is a little too academic for this blog. Essentially, if a buyer has a fixed house buying budget, then stamp tax will be a component of this budget and the seller's house will make up the balance.

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