By David Field -

With house prices continuing to rise, the chancellor is coming under increased pressure to alter the current thresholds and guidelines that govern stamp duty. Currently the threshold for stamp duty land tax is £125,000, so any homes bought or sold for more than that figure are liable for a one per cent levy. This increases to three per cent for homes in all areas over £250,000 and rises to four per cent for homes over £400,000.

Homes in disadvantaged areas have a higher threshold of £150,000 before the levy is applied, however, for homes above this figure the normal thresholds still apply and the rate increases to three per cent and four percent for property above £250,000 and £400,000 respectively. For non-residential property the scale is the same as the residential thresholds for disadvantaged areas. The one per cent tax only comes into force when a property is over £150,000.

Most people call for the government to raise the basic stamp duty level to £150,000 or more, whereas in the last budget the chancellor only increased it by £5,000. A possible way to finance this could be to lower the threshold for non-residential properties (businesses) to £125,000 and raise the residential threshold to £150,000. This would appease a certain amount of first-time buyers and recoup some of the money by taxing non-residential properties at a higher rate. I'm only calling for this to occur in standard areas and believe that the current level should be maintained in disadvantaged areas to encourage businesses to stay or even move to these areas, thus bringing about a higher level of investment.

There are other ideas. For instance John Charcol, an independent mortgage broker, has suggested that the system be changed to the income tax method. Therefore, households would only be taxed on the excess above the threshold. For instance, on a £252,500 house, rather than being charged three per cent for the whole amount, a homeowner would only be charged five per cent on the excess (£2,500). This would result in a far cheaper levy for the homeowner and wouldn't alter the higher echelons of the property market by a great deal.

Ray Boulger, from John Charcol, stated: "The threshold limits…need to be raised substantially to better reflect the current market. With average house prices now around £200,000, the lower limit should be at this level and the other thresholds raised substantially.

"The Financial Services Authority (FSA), which reports to the Treasury, quite rightly requires mortgage lenders and brokers to treat their customers fairly. It is about time Gordon Brown started treating his customers fairly."

Whatever change is made, there certainly needs to be some form of action by the government to address this important issue.