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UK residential property stamp duty revenue hits record high

This was up from £6.45 million the previous year and from £4.9 billion in 2012/2013 and the total tax collected from home buyers in the UK has grown by 165% over the last six years alone.

Transactions in London contributed the most residential stamp duty revenue at just over £3 billion, followed by the South East at £1.6 billion. Together these two regions accounted for 66% of the total tax take.

Between 2008/2009 and 2014/2015, stamp duty revenues in London have grown by 248%, compared to around 158% in the East of England and 140% in the South East. Other English regions had between 75% and 120% growth in the same period.

The increase in London reflects the growth in house prices in the city over this time compared to the rest of the country, as well as the fact that the higher rates of stamp duty on property transactions worth more than £1 million mostly affect London, according to an analysis of the figures by real estate firm Knight Frank.

Grainne Gilmore, head of UK residential research at Knight Frank, pointed out that last December’s cuts in stamp duty for homes worth up to £1.1 million has had little impact on the tax receipts from home buyers in the year to April.

‘Overall, home buyers still paid more in stamp duty than over the previous 12 months. While the increased take from stamp duty reflects the growth in house prices and a pick-up in transactions, another factor has been the increases to stamp duty charges, especially towards the top end of the market,’ she said.

She also pointed out that residential stamp duty garnered £7.5 billion for the Treasury in the year to April,  more than double the amount raised back in 2002/2003 and the Treasury’s windfalls from home buyers in England has grown by 165% over the last six years alone.

‘The relative burden of stamp duty is also highlighted by the data. Londoners paid 43 times more stamp duty than buyers in the North East over the last year, a reflection of the widening of the North/South divide in terms of activity and prices, but also the higher stamp duty charges for more expensive homes. Buyers in London and the South East accounted for 66% of all stamp duty receipts on residential property in the year to April,’ Gilmore explained.

‘It remains to be seen what the impact of the new stamp duty regime will be for the Treasury in the coming year. Despite hitting a record high for residential receipts in the year to 2015, the total stamp duty tax take at £10.7 billion is £800 million lower than the Treasury forecast when it made the changes to stamp duty back in December,’ she added.

According to Tom Bill, head of London residential research at Knight Frank, although the new stamp duty rules were only applicable for a quarter of the period in question, combined with a slowdown in activity that began after last summer as the general election campaign got underway and the prospect of a ‘mansion tax’ began to loom larger, there is a discernible impact on the prime central London market.

He explained that the stamp duty figures show the contribution to overall UK revenue of the top two local authorities in the country, Westminster and Kensington and Chelsea, declined last year.

‘Indeed, the contribution of the top five London boroughs has fallen to 18.9% from 21.1% over the last two years. To some extent, this may be explained by a pick-up in sales in the rest of the country as stamp duty has fallen for properties worth less than £1.1 million, which may have prompted more transactions,’ said Bill.

However, the rate of growth for stamp duty revenue in Westminster and Kensington and Chelsea has slowed and remains below the UK average. Stamp duty revenues in Kensington and Chelsea grew by 1.6% in 2014/2015 compared to 27.6% in 2013/2014.

In Westminster, revenues grew by 13.3% last year compared to 19.4% in the previous year. Meanwhile stamp duty revenues in the UK grew by 16.3% compared to 31.5% in 2013/2014. The other top contributing London boroughs also saw sharp falls in growth in 2014/2015 that were below the UK average.