Stamp duty raises more than £5bn

Caroline Spelman says stamp duty is a stealth tax

Residential property buyers paid the government a record £5.5bn in stamp duty in the last financial year.

Figures from HM Revenue & Customs show the government raised more from the tax than from the duties paid on beer and spirits.

The Conservative party spokeswoman, Caroline Spelman, said stamp duty was being used "to enrich the Treasury at the expense of home owners".

But the Treasury said the increase was due to the big rise in house prices.

In his budget earlier this year, the Chancellor raised the starting threshold for the tax from £60,000 to £120,000.

At the time, the government estimated that as a result half of all first-time buyers and 45% of all house purchases would become totally exempt from stamp duty.

It also estimated the change would cost it £250m.

Fiscal drag

Stamp duty is currently charged at a rate of 1% on homes sold for between £120,000 and £250,000, 3% on properties worth between £250,000 and £500,000, and 4% on those selling for more than £500,000.

But with the dramatic rise in house prices over the last decade, the tax has generated huge sums of money for the government.

Back in 1996-97, it raised just £675 million - roughly an eighth of its current levels.

John Whiting, a senior tax partner at the big accountancy firm PriceWaterhouseCoopers, said it was an example of what economists call "fiscal drag":.

"Prices go up so taxes go up," he said.

"It is a great example of raising taxes without raising the tax rates."