The taxman’s take from stamp duty has fallen by the largest amount since the financial crisis, latest official data has shown.
Data released by HM Revenue & Customs yesterday (October 1) showed the government collected £11.9bn in Stamp Duty Land Tax in the most recent tax year, a 7 per cent drop on the previous year’s total.
That is the biggest drop since the 2008/09 tax year at the height of the financial crisis, and was mainly attributable to tax received on residential property, which fell 10 per cent.
A number of changes have been made to the stamp duty rules in recent years, including the devolving of the tax to the Welsh government, which means the amount collected no longer goes to HMRC, and so is not included in these figures.
HMRC said the drop in receipts would have been 3 per cent if it had counted the revenue collected in Wales and the money it doesn’t get since the introduction of First Time Buyer Relief on stamp duty.
This tax break was introduced in November 2017 and means those buying a property for less than £300,000 do not have to pay stamp duty, while those paying between £300,000 and £500,000 pay a discounted rate of 5 per cent.
George Bull, senior tax partner at RSM, said he estimates this has reduced the tax take by £500m.
He said: “Until 2018/19, SDLT receipts for both residential and non-residential transactions have increased steadily since the credit crunch and economic downturn.
"Receipts are affected by a number of factors including property price inflation, market activity (transaction numbers) and a series of changes to the tax itself.
"HMRC estimates that, without first-time buyer’s relief and the devolution of taxes to Wales, the fall would be less than 3 per cent. But that would still be the biggest drop since the credit crunch and economic downturn of 2008/09."
Zena Hanks, a partner at Saffery Chapness, an accountancy practice, said the government appeared to have changed its mind about another proposed stamp duty reform, which could have had a further impact on the tax receipts.
She said: “In its draft 2020 Finance Bill the Treasury omitted the proposed SDLT surcharge for non-UK residents.
"As we can see from today’s statistics, non-residential transactions are already beginning to decline – whether this is due to Brexit, concerns over value or other factors is uncertain – but the likelihood is that if government had ploughed ahead with this measure, or does so in the future, not only would it have introduced yet more complexity into the Stamp Duty system, already creaking as it stands, but it could deter overseas investment into the UK which, in many cases, is the stimulus for additional growth and access to a wider variety of housing products.”
The Treasury declined to comment.