Recent stamp duty changes have resulted in a substantial decline in transaction numbers and HM Revenue & Customs missing its revenue target for the 2016/17 financial year, claims an estate agency chief.
Nick Leeming, chairman of Jackson-Stops & Staff, says that while the Osborne stamp duty reforms introduced in late 2014 were good news for 98 per cent of property buyers, the more recent three per cent stamp duty surcharge on additional homes - the extra three per cent introduced in April - has resulted in a substantial decline in transaction numbers.
“Any government hopes of more revenue from stamp duty or residential transactions has not materialised and if overall tax revenue projections are to be achieved more tax rises will be needed elsewhere” he warns.
“[Today’s] Autumn Statement urgently needs to address this shortfall by incentivising people to move home. Removing the additional three per cent levy will in my opinion do just that, while further measures to support both downsizers and first time buyers must also be implemented if we are to see a true shift in overcoming the housing crisis” he adds.
JS&S says that in the four quarters of the tax year 2015/16, stamp duty revenue from land and property totalled £10.7 billion of which £7.3 billion was from residential property.
The residential value was down from £7.5 billion the previous tax year (2014/15) as a result of the December 2014 stamp duty charges which lowered the stamp duty payable for 98 per cent of transactions.
However, JS&S claims that the Government’s 2016 Budget Red Book predicts an uplift in stamp duty land tax revenue from £10.7 billion in 2015/16 to £12.9 billion in 2016/17.
“Assuming the residential part of this government forecast (which is not published) grows in line with the total, the government’s budgeted stamp duty from residential transactions is £8.8 billion, this being up 21 per cent from the £7.3 billion in 2015/16” says Leeming.
“Taking the latest stamp duty revenue statistics for 2016 Q2 and 2016 Q3, we see that so far this year, residential stamp duty revenue has been £4,184 million of which £3,467 million is the total without the three per cent surcharge” he continues.
“Assuming the tax year’s remaining two quarters generate the same revenue, the projected revenue is £8.4 billion - a full £400 million below the government’s own budget projections. This projection for what will actually occur is still almost certainly far too high, as the drop in transactions means that residential revenue will be reduced in the second half of this present tax year.”