Money raised from stamp duty in most of the UK is falling, official data shows
Hundreds of thousands of first time buyers have benefitted from stamp duty relief but overall the amount of money raised by the property tax in the UK, excluding Scotland, has fallen, official figures show.
Tax receipts for 2018 in England, Wales and Northern Ireland fell by 8.5% compared with the previous year, a loss of income to the Treasury of £802 million, according to the data from HMRC.
This came at a time when home sales fell by 2.6% but a breakdown of the figures shows that revenue from higher rates of stamp duty for additional homes fell. The amount raised from the 3% higher rate, paid on buy to let homes and holiday and second homes, fell by 14.2%, a fall of £285 million.
The data also shows that 241,000 first time buyers paid less or no stamp duty due to the relief introduced in November 2017. The relief was claimed in 60,700 transactions, in the fourth quarter of 2018, an increase of 3% compared to the previous quarter.
‘These statistics show the value of government help for first time buyers. Over the last quarter 60,000 new home owners got help to realise the dream of property ownership,’ said Mel Stride MP, Financial Secretary to the Treasury.
According to Naomi Heaton, chief executive officer of LCP, stamp duty rates are affecting the sales market as buyers are now holding back. ‘The febrile political climate around the UK’s departure from the European Union and stagnating prices, have brought ever growing uncertainty to the residential market, following several years of increased taxation.’ She said.
‘Receipts have followed suit with transactions, which have fallen 8.5% overall. The receipts from the 3% additional duty have suffered the largest drop, falling 14.2%. This has been the result of dwindling numbers of second home and rental purchases,’ she pointed out.
She also explained that while the relief for first time buyers represents a saving for the average purchaser of £2,374, take up appears to be plateauing, with 60,700 transactions claiming relief in the final quarter of 2018, compared with 59,000 in the previous quarter, a rise of just 2.9%.
‘HMRC’s 2018 stamp duty statistics do not paint a rosy picture of the UK housing market, with neither the buyer nor the Exchequer winning out. Until the Government has a clear road map for Brexit, we are unlikely to see increased transactions and therefore increased revenues,’ she added.
The Association of Accounting Technicians (AAT) believes that the root of dwindling stamp duty revenue could be solved by switching the liability from the buyer to the seller as it would make it fairer.
‘Those moving up the ladder would be paying duty on the lower priced house that they are selling, not the higher price one they are buying. It would also remove every single first time buyer from liability, irrespective of the cost of the house they are buying,’ said Phil Hall, AAT head of public affairs and public policy.
‘It’s important to highlight that this change would save the taxpayer huge sums of money, almost £700 million a year, whilst simultaneously protecting the billions of pounds stamp duty raises,’ he added.