Modernising stamp duty

by David Clifton of thePublican.com's legal team of experts from London solicitors Joelson Wilson​

Nothing in life is certain except death and tax - so the saying goes. One thing that has been certain since 1891 is that stamp duty is payable on property transactions, as those readers who have bought their own home will know.

Stamp duty on land and property currently raises over £4bn, of which about £300m relates to lease duty. It is paid each year by about 1.4 million individuals buying houses, about 80,000 companies purchasing commercial property, land or housing stock and about 250,000 individuals and businesses taking out new leases on residential and commercial property.

Earlier this year the Inland Revenue issued proposals to modernise stamp duty. The consultation document states that the aims are to simplify the way in which stamp duty is paid and to impose measures to prevent stamp duty avoidance.

Part of the proposals are sensible. For example, rather than physically taking documents to be stamped at a stamp office, it is proposed that electronic methods will be introduced. Other parts are designed to prevent avoidance of stamp duty and to bring about the end of some stamp duty relief which the Economic Secretary to the Treasury has described as "a significant threat to the tax base".

What has particularly excited interest, however, in the licensed trade is the proposal that there be adopted a new formula for the calculation of duty in relation to commercial leases. Nick Bish, of the Association of Licensed Multiple Retailers (ALMR), is suggesting that this could increase by 4,000 per cent the current nominal stamp duty figure of about £600 per lease.

The ALMR is not alone in expressing concern to the government and the Inland Revenue Consultative Committee about the proposals, which are currently likely to go before Parliament in 2003.