The amount of money the government is making from stamp duty has significantly decreased, as recent data indicates.
There’s been a notable 21% decline in the number of homes sold in the UK, with just 1.2 million properties changing hands in the last year. Additionally, there was a 23% reduction in the total amount borrowed for mortgages last year, with figures from UK Finance showing a drop to £130 billion.
This decrease in housing activity is also reflected in a 24% fall in stamp duty revenue, which amounted to £11.6 billion in the year leading up to March.
However, there’s a slight improvement as March saw an increase of 10.6% in stamp duty collections, going up to £864 compared to February, suggesting a gradual market recovery.
Forecasts from the Office for Budget Responsibility suggest a gradual rise in property taxes, including stamp duty, which could see an increase of £1.3 billion this year and continue to grow to reach £22.1 billion by 2028-29.
Jonathan Stinton of Coventry Building Society remarked that the UK Treasury has lost nearly £4 billion due to around 200,000 fewer property sales last year. He pointed out that homebuyers are still facing substantial tax costs, amounting to thousands of pounds, to purchase a home.
Chancellor Jeremy Hunt is reportedly pondering reductions in stamp duty and national insurance prior to the upcoming general election.
Hunt has hinted at a potential “fiscal event” before the election to reinforce the Conservatives’ reputation for tax cuts.
According to The Times, the Treasury is contemplating increasing the stamp duty threshold from £250,000 to £300,000 in the autumn statement before the election. This change could mean nearly half of the new homebuyers wouldn’t have to pay this tax – although such a measure is projected to cost around £3 billion a year by the end of the decade.
Stinton expressed scepticism about the reoccurring rumours of stamp duty cuts in the Autumn Statement, implying it might discourage potential buyers if the cuts do not materialize. He argues that a thorough review of stamp duty is necessary, one that addresses various issues and avoids using the tax as a tool for political manoeuvres.
A representative from the Treasury stated that any announcements regarding fiscal events would be made through standard channels.