Brown's £500m stamp duty grab

THE Chancellor is planning to wring £500m more tax out of the commercial property world in the biggest shake-up of stamp duty since 1891.

The root and branch reform, spearheaded by a special Inland Revenue team, has caused widespread dismay in an industry reeling from the worst City office downturn for a decade. Some feel the sector is a soft target. 'Commercial property doesn't have a vote,' said one observer.

But the Government claims reform is long overdue. It says £500m of stamp duty on £10bn of property deals goes unpaid each year. Inland Revenue director Craig Lester, who is overseeing the changes, says: 'The system is too leaky.'

For more than 300 years the stamp offices have collected the duty by embossing stamps on deeds. The tax was introduced in 1694 during the reign of William and Mary to pay to fight the French.

Companies have avoided it because it is a tax on a piece of paper, not a transaction. Deals are done where property changes hands, but no conveyance document is issued - hence no tax is paid.

The industry says this is because the Chancellor raised duty rates four times in less than three years, to a top rate of 4% for properties over £500,000. Since Labour came to power, income from the duty has quadrupled to £8bn a year - about half from share deals.

From 1 December, it will be known as Stamp Duty Land Tax and must be paid on all deals instead of documents.