If former Chancellor George Osborne thought his 2014 stamp duty reform would produce more income for the government, it appears he was very much mistaken.
New figures produced by HMRC and analysed by investment consultancy London Central Portfolio suggest that stamp duty receipts fell 8.5 per cent in 2018 compared to the previous year. The duty gathered for HMRC some £8.669 billion - that’s £802m less than a year ago.
Receipts from the Additional Homes surcharge - that's the three per cent surcharge on buy to let properties and holiday homes - dropped 14.2 per cent last year when compared with 2017. The surcharge now contributes 18.8 per cent of the total stamp duty ‘take’ - a year ago the proportion was 21.1 per cent, and the drop reflects a 4.6 per cent fall in the number of buy to lets or second homes purchased.
Of greater success in terms of impact on the housing market - although not in terms of income for the Treasury - has been the first time buyers’ stamp duty relief announced in 2017 by current Chancellor Phillip Hammond.
Some 217,800 FTBs have claimed it, amounting to £517m in 2018. This represents a saving for the average purchaser of £2,374.
But London Central Portfolio warns that take up appears to be plateauing with 60,700 transactions claiming FTBR in Q4 2018, compared with 59,000 in Q3; a rise of just 2.9 per cent, which is much less than earlier quarterly increases.
This useful analysis of the latest stamp duty figures comes with LCP’s most recent analysis of the housing market, which is marked by Brexit-fuelled pessimism.
It says transactions in the whole residential market fell 2.6 per cent in 2018 and now stand at just over one million.
“The fall in transactions reported in HMRC’s 2018 SDLT report reinforces the surfeit of statistics, showing buyers now holding back. The febrile political climate around the UK’s departure from the EU and stagnating prices, have brought ever growing uncertainty to the residential market, following several years of increased taxation” says Naomi Heaton, chief executive of LCP.
“The total revenue for HMRC amounted to £8.669 billion, a fall of almost £1 billion on 2017. Even if the amount of tax claimed under First Time Buyers’ Relief, which the Exchequer would see as a ‘tax giveaway’ was added back, the total take would still be down 3.6 per cent” she adds.
“Until the government has a clear road map for Brexit, we are unlikely to see increased transactions and therefore increased revenues” she concludes.
LCP says that with the housing market in a parlous state it hopes Philip Hammond will not implement an additional levy of one per cent on overseas purchasers, proposed in the November 2018 Budget. “This would seem to be particularly imprudent in light of the UK’s need to build on global investment as it exits the EU” says LCP.