Stamp Duty  

Stamp duty receipts hit record despite holiday

Stamp duty receipts hit record despite holiday

HM Revenue & Customs collected £5.7bn in stamp duty in the first four months of 2020-21, with land tax receipts for July reaching their highest monthly level on record despite the tax holiday.

The overall figure for stamp duty was £2.2bn higher than the same period last year and failed to beat March, which remains the government body’s best month to date.

But receipts for stamp duty land tax alone - stripping out stamp duty reserve tax which is paid on shares - were £1.3bn in July which was a new record.

HMRC said the surplus income was down to an “exceptional[ly] high number of transactions” following the stamp duty holiday wind down, which saw a number of deals settled in July due to the 14-day payment window.

On July 1 the tax-free rate fell from no stamp duty on the first £500,000 of a property, to no stamp duty on the first £250,000.

Jonathan Stinton, Coventry Building Society’s head of intermediary relationships, said 2021 could well be a record year for stamp duty land tax.

HMRC’s latest figures have prompted Stinton to renew his calls for the stamp duty thresholds to be reviewed, “as it is already generating substantial sums for the Treasury”.

Earlier this month, Stinton and Conor Murphy, chief executive of Smartr365, argued the government should consider permanent stamp duty reductions.

“Permanent reductions to stamp duty will help ensure homeownership remains an accessible venture and that the market retains its buoyancy come the end of September,” said Murphy.

Stinton added that the lower starting point of £250,000 introduced in July means people buying an average-priced home now trigger a tax bill. 

“The size of those bills and the number of people paying them will only increase once the  holiday ends in full on September 30,” he said.

“The sweet spot for both the taxman and for home buyers may well be a higher stamp duty threshold than the default position that will be adopted in October.”

But not everyone agreed on this trend. Charlotte Nixon, mortgage expert at Quilter, said the market may see these receipts “fall throughout the rest of the year as the lure of the stamp duty holiday is no more”. 

She added: “We have started to see mortgage borrowing cooling off and house prices slowly beginning to fall following the scheme’s completion, but it is likely to be a long while before the housing market returns to pre-pandemic norms.”

Sarah Coles, a personal finance analyst at Hargreaves Lansdown, said every time there’s a change to stamp duty, the market usually expects the tax take to drop significantly below normal levels in the following months.

“However, there are some signs that record low mortgage rates have continued to support the market, so while we can expect this to be a high point, we’re not expecting it to plummet in the coming months.”