Stamp duty exemption applies in disadvantaged areas

Homeowners in some of the UK's poorest boroughs are paying stamp duty despite living in areas that are supposed to be exempt from the charge.

The failure of the Inland Revenue to update the list of areas on its website that are exempt from the charge is being blamed.

And, as the same stamp duty exemptions apply to commercial property purchases, business leaders are calling on the Inland Revenue to clean up its act.

Postcode lottery

In an effort to stimulate the housing market, Chancellor Gordon Brown last year abolished stamp duty in poorer areas on property sales of up to �150,000.

If solicitors are relying upon out of date information when dealing with clients then potentially thousands could end up paying unnecessary tax John Whiting

Whether or not a property is exempt depends upon the constituency ward in which it is located.

However, the Inland Revenue has, on its website, relied on postcode data for identifying exempt areas.

And there is a time lag between a new postcode being created - for example, when a new development is built - and it being married to ward data, and included on the Inland Revenue website.

Some solicitors relying upon the revenue website have been erroneously informing clients that they must pay the charge.

Welsh wards

John Smith, Labour MP for the Vale of Glamorgan, told BBC Wales that 12 of his constituents, in three different wards, had paid stamp duty erroneously.

I am calling on whoever is responsible for co-ordinating this information to actively ensure that the business community gets to know if they are located in an exempt area or not. Federation of Small Businesses

He added that this was likely to be a problem encountered nationwide, particularly as an estimated 8,000 new postcodes are generated in the UK every year.

"This is a serious issue if solicitors are relying upon out of date information when dealing with clients," John Whiting, senior tax partner at PricewaterhouseCoopers, told BBC News Online.

"Potentially thousands of homebuyers could end up paying unnecessary tax."

In response, an Inland Revenue spokesperson told BBC News Online that the areas exempt list was only a guide, and that the helpline was the point of call for most up to date information.

The spokesperson added that few people had so far complained that they had paid stamp duty unnecessarily.

Refunds would be made if payments had been wrongly made.

Business worries

The chancellor's plan to exempt commercial property sales in disadvantaged areas from stamp duty got the green light from the European Union in January.

But business leaders are unhappy that firms could also be paying unnecessary stamp duty.

"Small business people are time poor - they are likely to take the revenue website at face value," a Federation of Small Businesses (FSB) spokesperson said.

"I am calling on whoever is responsible for co-ordinating this information to actively ensure that the business community gets to know if they are located in an exempt area or not."

Those with questions on the duty can ring the Inland Revenue helpline on 0845 60 30 135.