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Stamp duty intake hits £955m in June as IHT receipts reach record high

Paloma Kubiak
Written By:
Paloma Kubiak

The total stamp duty tax paid by homeowners came to £955m in June, down on the £1.37bn intake in the same month last year. Inheritance tax receipts for the month surged to a new high.

The figures from HMRC showed that overall stamp taxes were £1.5bn lower in Q2 than they were last year, with a total intake of £3.7bn. The Government department put most of this down to a decline in stamp duty land tax due to lower property transaction numbers and the lower threshold for the levy. 

From April to June, £2.74bn was paid in stamp duty while for the year so far, this amounted to £5.4bn. 

The amount paid in stamp duty from January to June was 28% or £2.1bn lower than the same period last year. 

Call for a reform 

Coventry Building Society has called for the stamp duty land tax to be reformed as it said this could be a deterrent to potential movers. 

Based on the average price of a home in England, someone buying a new property could be faced with a £2,786 tax bill. In London, this could rise to £14,184. 

Jonathan Stinton, head of intermediary relationships at Coventry Building Society, said: “The one-size-fits-all approach to stamp duty could be keeping people from moving to a property which is right for them. People who have recently separated could be struggling to buy a place on their own, empty-nesters could be hit with a large tax bill for downsizing, and even first-time buyers could miss out on their relief if they are buying jointly with a non-first-time buyer. 

“The tax regime should be more considerate of the fact that people may need to go both up and down the ladder throughout their lifetime, so it needs to become less of a deterrent to move. Changing the thresholds has always been the go-to solution, and it’s been welcome news for buyers in the past, but today’s bills are often eye-watering and a thorough review with more focus on supporting people throughout every stage of homeownership is what’s really needed.” 

IHT receipts reach monthly high 

In June, the inheritance tax (IHT) intake reached £795m, which was a record high for any month.  

HMRC said this could be due to the rise in interest rates that it charges on overdue tax bills following the increase in the base rate. The department speculated that the higher interest rates would have encouraged people to pay the IHT sooner. 

From April to June, around £2bn was paid in IHT which was £200m higher than the same period last year. 

The Office for Budget Responsibility (OBR) predicted that £7.2bn was set to be raised by IHT this year and by 2027/2028 the annual intake could reach £8.4bn. 

Rising house prices and the frozen nil rate threshold have widened the number of people liable to pay the tax. 

Stephen Lowe, group communications director at Just Group, said: “The inheritance tax juggernaut is picking up pace setting monthly and quarterly record highs for the Treasury. In the opening quarter of this financial year, inheritance tax generated around £22m every day for the Government’s coffers. 

 “The frozen thresholds and property price increases during the pandemic are still feeding into the system, so as a result the government looks set to receive more from inheritance tax for the foreseeable future.” 

Julia Peake, tax and estate planning specialist at Canada Life, added: “IHT is the tax gift that keeps on giving, with receipts already firmly on track to break new records. 

“With the right financial planning, IHT can be a largely discretionary tax. But many estates have found they have been caught by the IHT tax net through growing house prices, compounded by the freezing of nil-rate and resident nil-rate tax bands. 

“The effective use of trusts and gifting, and the right retirement income strategy, can all help minimise the value of your estate when it comes to calculating any IHT liability, ensuring it can be passed on to your beneficiaries as efficiently as possible.”