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Stamp Duty takings surge by £2bn ahead of Autumn Budget

Cherry Reynard
Written By:
Cherry Reynard

Stamp duty takings jumped by almost a quarter in the three months to October compared to the same period last year, raising pressure on the government to reform the controversial levy in next month’s Budget.

The government collected £2.6bn in residential Stamp Duty in the third quarter of 2017, up 23% year-on-year, HMRC statistics today revealed.

At the same time, the number of sales liable for the tax increased by 7%, according to the data.

In the current financial year-to-date the amount of transactions hit by the tax is up by 6% compared to 2016/17, with rising house prices largely behind the increase in the number of transactions falling into the Stamp Duty net.

Stamp Duty of 2% is slapped on any residential sales above £125,001 and up to £250,000. Transactions above this level and up to £925,000 must pay the tax at a rate of 5%.

The number of sales between £250,000 and £500,000 surged by 11% in Q3 2017, compared to the same quarter in 2016, the HMRC figures showed.

It comes amid calls for chancellor Philip Hammond to overhaul the levy in next month’s Autumn Budget.

Critics say Stamp Duty and higher house prices create a barrier to homeownership for first-time buyers. The number of sales escaping the levy in Q3 2017 is 5% lower than the same period last year.

Scrap this tax

Jeremy Duncombe, director of Legal & General Mortgage Club, said: “Until the government addresses Stamp Duty’s role in the housing market, this tax will continue to be a barrier for thousands of people on the housing ladder, whether that be a bottleneck for hopeful younger buyers or a deterrent for those looking to downsize in later life.

“If the chancellor were to scrap this tax for first and last time buyers in the Budget, this would help affordability for new homeowners and free up existing stock for all.

“Stamp Duty receipts provide the State with three times as much income as it did in the 1990s, and receipts from Q3 2017 were 23% above the same period in 2016.

“Re-investing these unexpected windfalls into the housing market would help the government’s stated aim of increased homeownership.”

Critics suggest that reforming Stamp Duty could boost the number of transactions and also free up housing for younger generations from downsizers.

Stamp Duty was reformed by previous chancellor George Osborne on 4 December 2014 – it means high value buyers at £1.5m and above pay rates of up to 12%.

And an extra Stamp Duty surcharge of 3% was introduced in April last year for anyone buying a second home.

See YourMoney.com’s Have you overpaid stamp duty? How you can reclaim the tax for more information.