RE: The crutches17 May 2021 16:58
Stamp Duty was first introduced in 1694 by an Act of Parliament during the reign of William and Mary. The new tax was raised against official documents written on vellum (calf skin), parchment (other hides) and paper, which were required to be presented for stamping and payment of the appropriate duty levied against them.
The original intention was for the tax to be a temporary measure to raise finances for the war against France. However, it proved so successful as a means of raising revenue for the government that it still endures today.
The tax applied in 1694 to property transactions as well as other documents. The first rates were fixed at five shillings for conveyances and forty shillings to grants of land or leases.
As the name of the duty implied, proof of payment of the tax was evidenced by a “stamp”. Officers of the Crown were appointed to oversee the physical stamping of documents at the point of payment of the duty. A durable impression was made to the document to safeguard against forgery and counterfeiting.
Originally the tax was a fixed rate duty and it did not matter as to the value of the property transacted as to the amount that was payable. Later Acts of Parliament introduced in the 19th Century would create an “ad valorem” (according to value) tax assessing the amount of duty on the value of the land bought and sold. In much the same way as now, a failure to comply with stamping obligations could result in a fine which was usually considerably greater than the original tax due, to encourage compliance.
Over the years stamp duty was applied not only to land but to such diverse things as cheques, hair powder, dice and playing cards. As fashions and customary practices have changed those taxes have been repealed and today we now only really associate “stamp duty” with property purchases and with transactions in stocks and shares.
For centuries it was paid and collected in a similar way, by physically taking documents to one of HM Revenue and Customs’ stamp offices to receive a stamp. The old paper based system had its drawbacks, not least in terms of administrative expense and because the onus was on the tax payer to volunteer the instrument to be stamped, leading to increasingly clever schemes of avoidance. The duty was reformed to become “stamp duty land tax” which is largely administered by online tax returns and payments are collected by electronic transfer.
Until as late as 1997 the highest rate payable was 1%, and even that only applied to relatively expensive properties. Rates have been on the increase ever since with the highest rate now being 12% for properties valued over £1.5 million. The tax has been popular with the exchequer as a means of raising revenue and in the last few years has netted the government in excess of £8 billion annually.
The tax is not without its critics as it has some negative impacts on the housing market and is a factor in reducing mobility in the workforce and populatio
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