UK residential property stamp duty increases
The 2014/15 financial year was particularly fruitful for the UK taxman, with HMRC collecting a record £7.5bn in stamp duty from residential property transactions.
This was a rise from the £6.45m in the previous year and from £4.9bn in 2012/13. What’s more, the total tax collected from home-buyers in Britain has risen by 165% over the last six years alone, according to a new report from Knight Frank.
Revenue
Unsurprisingly, transactions in London contributed the largest amount of residential stamp duty revenue, totalling just over £3bn. The South East followed the capital, where revenue totalled £1.6bn. Put together, these two areas accounted for 66% of the total tax take for UK properties.[1]
In between the 2008/09 and 2014/15 tax years, stamp duty revenues in the capital have risen by 248%, in comparison to 158% in the East of England and 140% in the South East. Other regions in England had between 75% and 120% growth during the same timeframe.[1]
These increases in London show that the greater rates of stamp duty on property transactions worth more than £1m mostly affect homes in the capital.
Grianne Gilmore, head of UK residential research at Knight Frank, said that 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.’[1]
UK residential property stamp duty increases
Steady increases
In addition, Gilmore noted that residential stamp duty raised £7.5bn for the Treasury in the year to April, more than double the amount in 2002/03.
‘The relative burden of stamp duty is also highlighted by the data,’ Gilmore continued. ‘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 changes 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.’[1]
Gilmore went on to say that, ‘it remains to be seen what the impact of the new stamp duty regime will be for the Treasury in the coming year.’ She said, ‘despite hitting a record high for residential receipts in the year to 2015, the total stamp duty tax take at £10.7bn is £800m lower than the Treasury forecast when it made the changes to stamp duty in December.’[1]
Impact
Tom Bill, head of London residential research at Knight Frank, observed that despite the fact stamp duty rules were only applicable during a quarter of the timeframe in question, the impact that it has had on the prime central London market is irrefutable. He said that the stamp duty figures indicate the contribution to the total UK revenue of the top two local authorities in the country, namely Westminster and Kensington and Chelsea, dropped last year.
Bill noted that, ‘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 £1.1m, which may have prompted more transactions.’[1]
This said, the rate of growth for stamp duty revenue in Westminster and Kensington and Chelsea has slowed to below the UK average. Indeed, stamp duty revenues in Kensington and Chelsea rose by 1.6% in 2014/2015, in comparison to 27.6% in 2013/14.[1]
Westminster meanwhile recorded revenue growth of 13.3% in the last year, in comparison to 19.4% in 2013/14. In the UK as a whole, stamp duty revenues in the UK rose by 16.3%, compared to 31.5% in 2013/14.[1]
[1] http://www.propertywire.com/news/europe/uk-stamp-duty-analysis-2015100211048.html
