RECORD HIGH STAMP DUTY!

Saturday, November 21, 2015

 

The tax year running up to April 2015 saw a huge increase in the amount of tax paid by people buying homes to Her Majesty’s Revenue and Customs (HMRC) via stamp duty, with a total of £7.5 billion collected via residential property transactions. It’s an increase of over a billion pounds since the previous year and is a record high, and just about double the amount of revenue collected via the same means during the tax year of 2002 to 2003.

The year running from 2013 to 2014 saw £6.45 billion received via stamp duty, with the year before that bringing in a comparatively measly £4.9 billion. In fact, the total tax received by HMRC via residential property purchases over the last six years has risen by upwards of 165%.

London Pays the Most Stamp Duty

Considering the prices there at the moment, it’s probably no surprise that the London area contributed the most stamp duty revenue, with nearly half of the £6.45bn total being collected by home owners in the capital and surrounding boroughs. The rest of the South East also contributed a further £1.6billion.

Also unsurprisingly, London saw the highest increase of stamp duty revenue at 248%, with most regions in England seeing rises somewhere between 70% and 120%. Two exceptions are the South East (aside from London), which saw a rise of 140% and the East of England with a rise of 158%. The rather large difference between London and the rest of the country has a lot to do with the increasing house prices in the city and surrounding boroughs, though there are also a lot more properties selling for over a million pounds in London than there are in the rest of the country. Those £1,000,000 properties incur a much higher stamp duty rate which obviously helps contribute to the higher amount of stamp duty revenue paid to HMRC.

There had been a decrease in the stamp duty rates for homes selling for up to £1.1 million last December, but this appears to have had little effect on the total stamp duty revenue that was collected.

Not All London Boroughs Saw an Increase

It would usually be expected that these figures reported by HMRC indicate that the more affluent areas of London are seeing the most activity with regards to paying stamp duty. However, this isn’t actually the case as Westminster, Kensington and Chelsea have all seen a decrease in the growth rate of stamp duty, even falling below the national average. While the stamp duty revenues of those three London boroughs grew by 27.6% between 2013 and 2014, that rate has since dropped dramatically to just 1.6%.

They are not the only London boroughs to see their growth rates diminish, but it would appear that activity around the rest of the capital has more than compensated for the few areas where growth has slowed considerably.