Stamp Duty

Stamp duty was one of the first taxes to be levied in the UK by the Inland Revenue when it was formed in 1849.

It was first introduced in the UK in 1694 and, like income tax, was later brought in to pay for the war against Napoleon – but it proved to be such a nice little earner for the Government that it was never repealed.

However, the attempted imposition of stamp duty in the English colonies in America led to the outcry of “no taxation without representation” and the Boston Tea Party in 1773. In some ways, stamp duty led to the American War of Independence.

Sadly, since the Boston Tea Party, all UK subjects have paid stamp duty with little more than the occasional grumble.

Why we pay stamp duty

Rising property values since the mid-1990s mean stamp duty has raised ever-increasing amounts of money for the Exchequer. Figures published in November 2006 showed it raised £5.5bn in the 2004-05 tax year. This compares with just £670m a decade ago.

By contrast, the decision in December 2006 to raise the lower threshold from £120,000 to £125,000 means the Treasury is handing back about £40m in the coming tax year, and then £30m in each of the subsequent two years.

Next: How much do we pay? >>