Home-owners paid £2 billion more in tax in 2004/05, Housing Review reveals

Home-owners paid £6.5 billion in stamp duty and inheritance tax last year - or more than four times the amount they paid in 1997 - according to the newly published UK Housing Review 2005/2006.  Stamp duty, at £5.5 billion, accounted for most of the tax paid by home-owners, but inheritance tax bills on property rose to £1.1 billion, compared to £480 million in 1997.

In the Review, published jointly by the CML and the Chartered Institute of Housing, Professor Steve Wilcox, of the Centre for Housing Policy at the University of York, analyses gross tax paid on residential property since 1991.  He concludes that stamp duty and inheritance tax payments are growing even faster than the amount the Government would take if it levied capital gains tax on housing wealth.

Professor Wilcox points out that in the 12 months to 2004/05, the most recent year for which Inland Revenue data is available, the amount paid by home-owners in stamp duty and inheritance tax grew by almost £2 billion or by 41%.

By contrast, the Government's decision to raise the stamp duty threshold from £60,000 to £120,000 before the general election in 2005 will reduce payments on residential property by only £250 million, or by 6.5%. And even this modest sum is set to reduce as the number of homes sold for less than £120,000 declines.

Publication of the Review coincides with the pre-Budget statement, due on 5 December, during which the Chancellor will update MPs on his tax and spending plans.  In its pre-Budget submission, the CML highlighted the complex range of Government policy proposals currently affecting mortgage and housing markets.  It estimated that new Government initiatives were expected to add £1,000 to the cost of buying a home, over and above the growing burden of taxation on home-ownership.

Commenting on the Review, the CML's Deputy Director General Peter Williams said:

"The findings on tax reinforce one of the key points in our pre-Budget submission, namely the growing financial burden on home-ownership created by Government policy.  We applaud the Government's election pledge to expand owner-occupation, but the reality is that this goal is in danger of being thwarted by growing cost and complexity of policy proposals and taxation measures."

Notes to Editors

1.  The UK Housing Review 2005/2006, produced jointly by the CML and the Chartered Institute of Housing, is published on 5 December.  It contains articles on contemporary housing issues, commentary, and more than 120 tables of statistical information.  Copies are available, priced £40, plus £5 postage and packing, from liz.porter@cml.org.uk (tel: 020 7440 2229).

2.  Bank of Scotland Corporate sponsored the UK Housing Review 2005/2006.  The University of York's centre for housing policy contributed to the costs of the section on contemporary issues.  Financial support was also provided by the Office of the Deputy Prime Minister, the Housing Corporation, the Joseph Rowntree Foundation, the National Assembly for Wales, the Scottish Executive and Northern Ireland Department for Social Development, Communities Scotland and the Northern Ireland Housing Executive.

3.  The CML's members are banks, building societies and other lenders who together undertake around 98% of all residential mortgage lending in the UK.  There are 11.6 million mortgages in the UK, with loans worth around £942 billion.