Blick Rothenberg

Number of UK properties sold is down but stamp duty land tax take continues to rise

23.03.2018

HM Revenue & Customs’ (“HMRC’s”) latest statistics reveal that the number of UK property transactions is on the decline, but stamp duty land tax (“SDLT”) receipts are still rising with a £1.3bn increase, taking the receipts to just over £13bn in the last 12 months, says Blick Rothenberg.

HM Revenue & Customs’ (“HMRC’s”) latest statistics reveal that the number of UK property transactions is on the decline, but stamp duty land tax (“SDLT”) receipts are still rising with a £1.3bn increase, taking the receipts to just over £13bn in the last 12 months, says Blick Rothenberg.

Paul Haywood-Schiefer, assistant manager at Blick Rothenberg, said, ‘The number of property transactions in the UK has declined, with 0.33% or 4,010 fewer transactions taking place in the last 12 months and with a decrease of 2.28% or 28,580 over the last two years.’

‘However, SDLT receipts are still rising with a £1.3bn (11.55%) increase in the last 12 months. Much of that increase can be put down to the 3% surcharge on second and additional property purchases.’

Paul explained, ‘Last January and February’s figures were inevitably bolstered by the surge of property transactions occurring in March 2016 when buyers were rushing to purchase second properties before the introduction of the additional 3% SDLT charge for second and additional properties.’

He added, ‘The first time buyer relief for those buying properties under £500,000 announced in the Autumn Budget 2017 is starting to show its first signs that some of the year on year receipts are going to be lower and we would expect to see this have a further impact on the receipts in the coming months.’

Frank Nash, partner at Blick Rothenberg, said, ‘Stamp duty is a major hurdle for home-buyers, but seemingly not so for investors. An additional 3% added to the purchase of a buy-to-let property is peanuts when spread over the life of the investment. Investors will be cautious around rising interest rates and reduced margins, but stamp duty is not itself a deterrent for investing.’   

‘On the Capital Gains Tax (“CGT”) front, HMRC has been collecting less with an 8% (£670 million) drop in the last 12 months and a 9.1% (just under £700 million) drop in the combined figures for January and February 2018, compared to January and February 2017. These are the months when most capital gain tax is collected due to most of it being paid through self-assessment.’

‘However, the truth is the Government has reaped what they have sown, as the 8% reduction of CGT main rate to 20%, except on property and carried interest, from April 2016 has inevitably led to this 8% decrease in receipts.’

‘However, the Government has taken action to bring more into the capital gains tax net by introducing capital gains tax for non UK residents owning UK residential properties, but due to the nature of the measures and UK property market prices remaining fairly static, it will be some time before the fruits of this change show through in the tax receipts.’

‘The latest Self-Assessment income tax receipts figures appear static with just a 0.6% increase in the last 12 months. This is just over 3% lower growth than can be seen in the PAYE receipts growth in the same period. In fact Self-Assessment income tax receipts are contributing just £28.5bn of the £180bn total income tax receipts, a mere 15.8% of the total.’

Paul said, ‘The likely explanation for this is that the less favourable dividend rates of tax beginning from April 2016 may have prompted business owners to accelerate dividends prior to this date, and so it was inevitable that there would be a slow down on growth which in the 12 months from March 2015 to February 2016 was 14%.’

‘Increases in the personal allowance and the starting rate for savings are also taking some people out of self-assessment altogether although these would have a lesser impact on the receipts.’

For more information, please contact Paul Haywood-Schiefer or Frank Nash.