For the same number of property transactions as two years ago, the Government has racked up an extra £2 billion in Stamp Duty Land Tax ("SDLT") thanks to the 3% surcharge on additional residential properties.
The latest statistics released by HMRC to 31 July 2017 show that the number of property transactions (1,204,730 = £12.4bn SDLT) is now broadly the same as the year to 31 July 2015 (1,205,700 = £10.4bn), but SDLT receipts have increased by 20% in the same period, equivalent to an extra £2bn in tax.
Robert Pullen, Director at Blick Rothenberg, said: “Some of this increase could relate to general property price increases, but it is likely that the majority relates to the changes from 1 April 2016, which added an additional 3% SDLT for purchases of additional residential properties.
“The policy intention was always stated to be to realign the residential property market to make it fairer for first time buyers. It is becoming clearer, however, that as prices continue to rise, the measure has succeeded only in generating extra tax for HMRC, as well as a sluggish property market evidenced by the number of property transactions falling.
He added: “The Government will need to urgently consider whether the additional 3% SDLT policy is helping achieve fairness in the property market, or if it is creating more problems than it is solving.”
On the income tax front, the statistics show that total receipts are up 5.42% on the previous 12 months, some 2.82% above inflation, with this figure being buoyed by a 22.03% increase from self-assessment income tax receipts in the same period.
Paul Haywood-Schiefer, Assistant Manager with the firm, said: “Although these are good results, the reality might be a little less spectacular. Income tax via self-assessment is collected, in most cases, through two payments on account; one in January and one in July each year, with any balance due the following January.
“In the summer of 2016 a significant number of individuals made their July tax payment late, resulting in over £1 billion more collected in August 2016 than in August 2015. For the 2016/17 payments, it looks like individuals have been paying early, with £888 million more collected in June and July 2017 than was collected in the same months of the previous year.
He added: “Next month, we will have a clearer picture of how much was raised via self-assessment that incorporates the late payments made in August. However, it is clear that there have been increases in the amount paid through self-assessment over the last year.
“Likely contributors to this are individuals bringing forward dividend payments before April 2016 to take advantage of the old dividend regime before it changed. These have then led to higher tax liabilities in January 2017 and so higher payments on account in July 2017.”
Corporate Tax receipts continue on the rise with a 15.5% increase in the twelve months to June 2017, followed by a 16.97% increase in the same period of time to July 2017.
For more information please contact Robert Pullen
or Paul Haywood-Schiefer