Rics proposes flexible stamp duty system

The Royal Institution of Chartered Surveyors (Rics) has proposed a series of changes to the stamp duty system, labelling the current structure as being "no longer fit for purpose".

It has suggested replacing the current "slab" system that charges buyers a rate based on the whole value of each property - meaning a large jump in tax at each threshold - to a "marginal" system where the rate only goes up for that portion of the value that exceeds each threshold.

Rics has advocated no charge for any house value below £150,000, with the value up to £250,000 charged at 2.5 per cent and that over £250,000 at five per cent.

The Association of Home Information Pack Providers has also called for homebuyers to be helped by the suspensions of stamp duty on any homes priced at under £200,000.

However, Rics noted that in the 2008-09 financial year the revenue from stamp duty could fall by as much as 24 per cent as a result of the plans.

If the government decides it cannot do without that revenue than it may resist calls for change.

Those who self build their home can avoid the tax altogether provided the plot of land they buy for this purpose falls below the stamp duty threshold.